Under the stewardship of head of treasury and corporate finance Emma Turner, Riverside secured a SONIA-based loan of almost £192m, including a £100m revolving credit facility (RCF), to refinance its bank debt portfolio – a decision the group took with three objectives in mind:
1. To bring together several, historic agreements into a single facility document – ensuring that the same terms, conditions and covenants applied across the group’s Lloyds-backed lending;
2. To introduce the first SONIA reference rate; and
3. To ensure that the group was leveraging its assets to their maximum potential.
The group was eager to optimise its use of security pledged with the bank. As a social housing Registered Provider, Riverside had accumulated a portfolio of loans typified almost exclusively by secured debt – in the form of legal charges over the properties it rents out to customers. In the treasury team’s assessment, existing financing arrangements failed to make best use of those assets, following changes to the valuation methodologies permitted for social housing properties.
Refinancing would open up additional borrowing without the need to pledge further security. The new loan would also unlock a significant amount of value that, in turn, could pave the way for a security release – which could be used to charge new borrowing for Riverside’s benefit. The group’s original LIBOR RCF was only £50m, so was doubled as part of the new transaction.
The deal had a significant, tone-setting impact, helping Lloyds to clarify what its SONIA offering would look like going forward. Riverside provided the bank with detailed feedback on the legal mechanism that determined how the SONIA calculation would work, together with input on the more practical aspects of implementation – such as the optimum speed for approving and making a payment.
The Riverside team completed a certificate of title for 7,000 properties in eight months and helped the group to unlock property valuations worth around £100m.
In December 2020, Riverside completed its first-ever private placement deal. The security released as part of the Lloyds refinancing in March underpinned that placement, ensuring that it was fully charged by the notes’ issuance dates.
“Dealing with security negotiations is typically a full-time job for lots of people. There is evidence here of significant tenacity to get this deal executed, particularly in light of that difficult completion date.”
Provider: Lloyds
Structure: Single-tranche refinancing of £191,855,530, encompassing a £100m RCF.