In a category that had no shortage of worthy contenders, the judges chose Edinburgh Airport as the winner.
At the beginning of the pandemic, Edinburgh Airport agreed an 18-month £75m term loan with its relationship banks to provide essential liquidity and resilience during an uncertain period – but as the crisis continued, it was apparent that addressing near-term bank refinancing risk was a prerequisite to securing financial covenant waivers for 2021 from around 10 institutional private placement lenders. Edinburgh Airport therefore needed to refinance both the £75m facility as well as its £100m original bank facility before the end of June 2021.
This was no easy undertaking, given that revenues were close to nil during the early months of 2021, and leverage levels were far in excess of default levels. Another challenge was that the COVID-19 crisis had led to a significant reduction in headcount in the airport’s finance team.
Nevertheless, Edinburgh Airport was able to remove all refinancing risk until at least March 2024 and secure full covenant waivers for 2021, along with relaxed covenants for 2022. The company also secured a £100m sustainability-linked loan – one of the first in the UK airport sector. All of its original lenders agreed to roll over their commitments, and Edinburgh Airport also brought two new lenders into its banking group.
Other notable features of the deal included the migration to SONIA-based pricing, as well as competitive pricing linked to performance across a number of sustainability KPIs, including a reduction in Scope 1 and 2 emissions and an increase in renewable energy self-generation – indeed, the margin on the refinanced loans was lower than the pricing previously obtained as part of the £75m term loan.
Provider: Scotia, ING, Natixis, Lloyds, NatWest, MUFG and NAB all participated in the refinancing exercise. Natixis was the environmental, social and governance coordinator, but the refinancing transactions were otherwise self-arranged.
Structure: £100m sustainability-linked term loan and £75m term loan.
“Completed during a time of crisis, this deal saw Edinburgh Airport bringing in new banks, renegotiating its covenants and providing liquidity through to 2024 – and it did it all with a reduced finance resource.”
Pepco Group
Overcoming adversity was a significant feature of Pepco Group’s refinancing exercise, which was commended by the judges in this category. Aiming to list on the Warsaw Stock Exchange in an initial public offering (IPO), Pepco needed to refinance existing debt. However, Pepco’s ultimate beneficial owner was Steinhoff International – a group that had collapsed in 2017 under a management-linked accounting scandal. While Pepco Group and its senior management had not been involved in the scandal, it meant that many international banks were unwilling to participate in the refinancing.
Despite this major obstacle and the complexity of negotiations, the group’s treasury team worked with a number of country-operational and IPO-linked banks to agree a secured funding package including a €300m three-year term loan, a €250m five-year term loan, and a five-year €190m revolving credit facility. Pepco subsequently had a successful IPO in May 2021.