Terra Firma, one of Europe’s leading alternative investment platforms, has announced the successful pricing of a c.£4 billion refinancing for The Annington Group. Terra Firma has raised £550 million from existing investors through Terra Firma Special Opportunities Fund 2 to contribute new equity to the refinancing, in addition to c.£3 billion of corporate bonds in sterling and euros and £400m in bank loans.
The transaction, worth a total of c.£4 billion, will transform Annington’s capital structure from relying on a securitisation structure maturing in 2021 to having an investment grade financing with staggered maturities as far out as 2047, along with an additional £550 million of new equity.
The new capital structure will deliver significant benefits to Annington, including:
- Lowering Annington’s cost of borrowing;
- De-risking its capital structure substantially from future interest rate increases;
- Extending out and better staging the maturities of its debt;
- Increasing Annington’s operational flexibility;
- Providing growth capital to explore potential growth opportunities in the UK private rental sector market.
Andrew Géczy, Chief Executive Officer of Terra Firma, said:
“When we acquired Annington in 2012, we always knew there was a single issue that would hold the business back – its legacy capital structure. Today’s announcement is a result of Terra Firma moving quickly to take advantage of favourable market conditions. This deal puts Annington on a strong financial footing and positions it for growth. We are delighted with the strong demand we have seen from large institutional investors across both the equity and the debt elements of the transaction.
“Just as we did with Deutsche Annington, Tank & Rast and AWAS, we have identified a market opportunity and moved quickly and creatively to execute a deal that will create considerable value for both Annington and our investors. This landmark deal is textbook Terra Firma and builds on the firm’s significant achievements over the course of the last year.”
James Hopkins, Chief Executive Officer of Annington, said:
“Today’s transaction is transformational and puts Annington in a strong position with both cheaper and longer term debt that sets us up well for the future. We very much appreciate the strong vote of confidence shown in Annington by our shareholders, banks and the capital markets by this transaction.”
Barclays and JPMorgan were mandated as Joint Lead Managers on the issuance.
Source: Terra Firma