The UK based holiday provider, Center Parcs, has
revealed a first of its kind financing package that enables it
to repay its existing debt while also raising funds for
expansion and growth.
innovative structure blends a £740 million whole business
securitisation (WBS) with the issuance of a £280 million
high-yield bond out of the same issuing structure. It is the
first time this model has been used in Europe.
lawyers believe that the Center Parcs refinancing
start of a trend of transactions that use a range of options to
achieve successful financing solutions.
This type of solution is something we expect to
see more of in the future, said Marcus Mackenzie of
Freshfields. It should be a very attractive way for
businesses which are real-estate asset rich to refinance
themselves where they are currently financed through a
commercial mortgage backed security (CMBS) that is coming to
the end of its life.
The WBS and high yield bonds are backed by the four
existing Center Parcs sites across the UK.
Bono, high yield partner at Freshfields said the combination of
investment grade bonds with a high yield tranche enabled Center
Parcs to maximise its investor base.
blending of a WBS with a high yield bond presented lawyers with
the challenge of coming up with a security and intercreditor
package that would satisfy both sets of creditors.
Mackenzie, who led the Freshfields team, said the high
yield creditors wanted their own separate enforcement process
akin to what they would have had if they had been lending in at
a more normal structurally subordinated level.
The financing was structured with a separate piece of
security at the
top of the structure which high yield creditors can
enforce independently of the main transaction
security. Enforcement of this is effectively in the hands of
the WBS creditors.
We managed to keep the two groups happy and come
up with a workable structure in terms of who gets what and
when, added Mackenzie.
The £1.2 billion refinancing was devised for
Center Parcs with the combined proceeds refinancing the
groups existing CMBS and subordinated debt.
Royal Bank of Scotland as global co-ordinator and arranger:
the borrower: Allen & Overy.
lead managers on the whole business securitisation and high
yield bond offerings: Barclays Capital, HSBC and