TIDM61HI
RNS Number : 5304K
Swan Housing Capital
21 December 2022
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014 AS
IMPLEMENTED INTO UK LAW BY VIRTUE OF THE EUROPEAN UNION
(WITHDRAWAL) ACT 2018 (AS AMED), AS SUPPLEMENTED BY THE MARKET
ABUSE (AMMENT) (EU EXIT) REGULATIONS (SI 2019/310)
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO, OR TO
ANY PERSON LOCATED OR RESIDENT IN, ANY OTHER JURISDICTION WHERE IT
IS UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS DOCUMENT.
21 DECEMBER 2022
SWAN HOUSING CAPITAL PLC
(a public limited company incorporated in England and Wales,
with registration number 9362244 under the Companies Act 2006
)
(the Issuer)
ANNOUNCEMENT OF CONSENT SOLICITATION
GBP250,000,000 3.625 per cent. Secured Bonds due 2048
(XS1195576233)
(the Bonds)
The Issuer announces today that it is convening a meeting of
holders of the Bonds (the Bondholders) for the approval by Eligible
Bondholders, by Extraordinary Resolution pursuant to the terms and
conditions of the Bonds (the Conditions) and the Bond Trust Deed
dated 5 March 2015 constituting the Bonds (the Bond Trust Deed), of
a proposal (the Proposal):
(a) to waive the failure by Swan Housing Association Limited
(the Borrower) to deliver to M&G Trustee Company Limited (as
Security Trustee) the consolidated audited financial statements of
the Borrower (as Group Parent) in respect of the financial year
ended 31 March 2022 pursuant to, and in accordance with the time
periods required under, the Loan Agreement dated 5 March 2015 (the
Loan Agreement) between the Issuer, the Borrower and the Security
Trustee (the Borrower Waiver);
(b) to waive the failure by the Issuer to deliver to M&G
Trustee Company Limited (as Bond Trustee) its balance sheet, profit
and loss account and report in respect of the financial year ended
31 March 2022 pursuant to, and in accordance with the time periods
required under, the Bond Trust Deed (the Issuer Waiver); and
(c) to consent to the replacement of the requirement in the Loan
Agreement to provide consolidated audited financial statements of
the Borrower (as Group Parent) in respect of the financial years
ended 31 March 2023 onwards with the requirement to provide
consolidated audited financial statements of Sanctuary Housing
Association (as the new parent of the Borrower following the
occurrence of the Sanctuary Acquisition (as defined below)) and
audited individual accounts of the Borrower (the Consent),
each as more fully described in the Consent Solicitation
Memorandum prepared by the Issuer dated 21 December 2022 (the
Consent Solicitation Memorandum).
Capitalised terms used in this announcement and not otherwise
defined herein have the meanings given to them in the Consent
Solicitation Memorandum.
Rationale for the Proposal
The Bonds were issued by the Issuer on 5 March 2015. The issue
proceeds of the Bonds were on-lent to the Borrower pursuant to the
Loan Agreement.
The Borrower has encountered significant challenges during the
year in its commercial operations, including cost overruns and
delays to works leading to slower sales. As a result, the amount of
debt in the Borrower has increased, as has the level of on-lending
by the Borrower to these subsidiaries.
It was announced on 10 December 2021 that the Borrower would
pursue a merger with Orbit Group, with the proposal being for the
Borrower to join the Orbit group as a subsidiary. In January 2022,
Orbit advanced a secured loan of GBP25 million, which was
subsequently increased to GBP40 million in March 2022.
Following lengthy discussions and a detailed due diligence
process, it was confirmed in late September 2022 that the merger
between the Borrower and Orbit would not proceed.
The Borrower and Sanctuary Housing Association (Sanctuary) then
entered into detailed discussions regarding a potential transaction
which, if consummated, would involve the Borrower becoming a
subsidiary of Sanctuary.
The business combination between Sanctuary and the Borrower is
subject to obtaining appropriate consents and satisfactorily
concluding commercial discussions with third parties. However, in
the interim, (a) the Borrower and Sanctuary have entered into a
managed service agreement whereby Sanctuary will manage the
Borrower and (b) Sanctuary Affordable Housing Limited (a member of
the Sanctuary group) has provided the Borrower with a secured loan
of GBP50 million, which has been used (i) to repay the loan from
Orbit in full and (ii) as additional liquidity into the
Borrower.
Provision of accounts
The Swan group operates a number of development schemes which
require a high level of management judgement and are subject to
high levels of estimation uncertainty. The draft consolidated
financial statements of the Borrower include an impairment charge
of GBP138.6 million recognised in the year to 31 March 2022 and an
impairment charge of GBP55.3 million recognised as a prior year
adjustment in the year to 31 March 2021 (Borrower: GBP36.9 million
impairment and GBP149.6 million release of subsidiary loans in the
year to 31 March 2022) in respect of these development schemes. The
developments have been impacted by significant operational
challenges, resulting from factors which include changes to the
Borrower's management team and changes to the building regulations,
together with the impact of macro-economic conditions. As a result,
the Borrower's current management team have been unable to provide
sufficient audit evidence to substantiate the quantum and timing of
the impairment charge and any related liabilities.
Grant Thornton LLP have been commissioned to carry out the year
end audit of the Borrower and the Issuer. As regards the Borrower,
these challenges have restricted Grant Thornton's ability to
conduct appropriate audit procedures over these balances and
transactions. As a result, Grant Thornton have been unable to
obtain sufficient appropriate audit evidence to provide a basis for
an audit opinion on the consolidated financial statements of the
Borrower. It is, however, prepared to conclude that the Borrower
remains a "going concern" on the basis of a merger.
Pursuant to:
(a) Clause 8.1(a) of the Loan Agreement, the Borrower is
required to supply to the Issuer and the Security Trustee, not
later than 180 days after the end of each relevant Financial Year,
a copy of the consolidated audited financial statements of the
Group Parent for such Financial Year;
(b) Clause 14.1(c) of the Bond Trust Deed, the Issuer is
required to cause to be prepared by the Auditors, in respect of
each annual accounting period, accounts in such form as will comply
with all relevant legal and accounting requirements and all
requirements for the time being of the London Stock Exchange;
and
(c) Clause 14.1(e) of the Bond Trust Deed, the Issuer is
required to send to the Bond Trustee, inter alia, two copies in
English of every balance sheet, profit and loss account and report
prepared in connection with the end of a financial year, not later
than 180 days after the end of such financial year.
As a result of the Orbit merger discussions not proceeding in
late September, the Borrower and the Issuer did not deliver their
accounts in accordance with the above provisions.
The Borrower and the Issuer expect to be able to deliver their
accounts subject to a business combination between Sanctuary and
the Borrower taking place and the Borrower thereby becoming a
subsidiary of Sanctuary (the Sanctuary Acquisition). However, in
relation to the Borrower, such accounts are expected to include a
disclaimer of opinion for the reasons stated above.
Sanctuary would like assurance that any breaches caused by the
failure of the Borrower and the Issuer to deliver accounts in
accordance with the timings referred to above or by the provision
of the Borrower accounts with a disclaimer of opinion are waived by
Bondholders prior to the completion of the Sanctuary Acquisition.
The Issuer is therefore seeking the consent of Bondholders in
respect of such waivers, subject to the occurrence of the Sanctuary
Acquisition (which is expected to take place on or prior to 31
January 2023). The Sanctuary Acquisition is subject to obtaining
appropriate consents and satisfactorily concluding commercial
discussions with third parties.
Ongoing obligations
Subject to the Sanctuary Acquisition becoming unconditional and
completing, the Borrower will no longer be a "Group Parent"
(notwithstanding the defined term referred to under the Loan
Agreement) and the Borrower and Sanctuary do not envisage that
consolidated audited financial statements of the Borrower would be
required by any other creditors or third parties going forward.
Sanctuary will engage auditors to undertake an audit of its
financial statements on a consolidated basis and, after the
completion of the Sanctuary Acquisition and in respect of the
financial year ending 31 March 2023, this would include the
Borrower. The Issuer is therefore seeking the consent of the
Bondholders to direct the Bond Trustee to consent to the Issuer
agreeing to amend the requirement in the Loan Agreement in relation
to the provision of accounts in respect of the financial years
ended 31 March 2023 onwards so that the Borrower is instead
required to deliver a copy of the consolidated audited financial
statements of Sanctuary for each financial year and also a copy of
the individual (not consolidated) audited financial statements of
the Borrower.
The Proposal
The Issuer is convening a meeting of the Bondholders for the
approval by Eligible Bondholders, by Extraordinary Resolution,
of:
(a) the Borrower Waiver;
(b) the Issuer Waiver; and
(c) the Consent,
in each case, subject to the occurrence of the Sanctuary
Acquisition,
all as more fully set out in the form of Extraordinary
Resolution set out in the Notice of Meeting annexed to the Consent
Solicitation Memorandum.
Majority Bondholders
Prior to the date of this announcement, the Issuer has discussed
the Proposal with Eligible Bondholders who the Issuer understands
holds 80 per cent. of the Outstanding Principal Amount of the Bonds
(the Majority Bondholders). After reviewing the Proposal, the
Majority Bondholders have indicated that they find the Proposal
acceptable and that they intend to vote in favour of the Proposal
in respect of their respective holdings of the Bonds. However, no
assurance is given that the Majority Bondholders will vote in
favour of the Proposal in respect of all or some of their
respective holdings of the Bonds.
Early Voting Fee
The Issuer will pay to each Eligible Bondholder from whom a
valid Electronic Voting Instruction is received by the Tabulation
Agent (and not subsequently validly revoked) prior to the Early
Instruction Deadline an amount equal to GBP1.00 for each GBP1,000
in Outstanding Principal Amount of the Bonds the subject of such
valid Electronic Voting Instruction (the Early Voting Fee).
The Early Voting Fee will be payable whether the Electronic
Voting Instruction is an instruction to vote for or against the
Extraordinary Resolution. However, payment of the Early Voting Fee
will be subject to satisfaction of the payment conditions (the
Payment Conditions), namely:
(a) satisfaction of the Consent Conditions (as further described
in the Consent Solicitation Memorandum); and
(b) the Supplemental Bond Trust Deed and the Supplemental Loan
Agreement being executed by each of the parties thereto; and
(c) the occurrence of the Sanctuary Acquisition.
To be eligible to receive the Early Voting Fee, each Eligible
Bondholder who submits a valid Electronic Voting Instruction must
not attend, or seek to attend, the Meeting in person or make any
other arrangements to be represented at the Meeting (other than by
way of their Electronic Voting Instruction(s)). Where payable, the
Early Voting Fee for any received (and not revoked) Electronic
Voting Instructions will be paid not later than the second Business
Day following the date on which the Payment Conditions are
satisfied.
Amendments to or Withdrawal of the Proposal
The Issuer reserves the right, in its sole discretion, to
extend, amend or withdraw any or all of the Proposal as described
in the Consent Solicitation Memorandum.
The Issuer will promptly give notice to Bondholders of any such
extension, amendment or withdrawal as described in the Consent
Solicitation Memorandum.
Indicative Timetable
Below is an indicative timetable showing one possible outcome
for the timing of the Proposal, based on the dates printed in the
Consent Solicitation Memorandum and assuming that the Meeting is
not adjourned. This timetable is subject to change and dates and
times may be extended or changed by the Issuer in accordance with
the terms of the Proposal, as described in the Consent Solicitation
Memorandum. Accordingly, the actual timetable may differ
significantly from the timetable below.
Event Date
Announcement of Proposal
Proposal announced and Notice of Meeting 21 December 2022
published.
Consent Solicitation Memorandum; Transaction
Documents (as defined in the Bond Trust
Deed); draft Supplemental Bond Trust Deed;
and draft Supplemental Loan Agreement available
on request from the Tabulation Agent.
Early Instruction Deadline
Deadline for receipt by the Tabulation 4:00 p.m. (London
Agent of valid Electronic Voting Instructions time) on 9 January
to appoint the Tabulation Agent as proxy 2023
to be valid for receipt of the Early Voting
Fee.
Expiration Time
Deadline for revocation of Electronic Voting 4:00 p.m. (London
Instructions that have been submitted. time) 12 January 2023
Meeting
Meeting to be held at the offices of Addleshaw 12:00 noon (London
Goddard LLP, Milton Gate, 60 Chiswell Street, time) 17January 2023
London EC1Y 4AG.
Announcement of the results of the Meeting
Announcement of the results of the Meeting. As soon as reasonably
If the Extraordinary Resolution is passed practicable following
at the Meeting, Supplemental Loan Agreement the Meeting on 17
to be executed. January 2023
Settlement Date
(2 business days following the satisfaction Expected to be not
of the Payment Conditions) later than 4 April
2023
The above dates and times are subject, where applicable, to the
earlier deadlines set by the Clearing Systems and any intermediary
through which Eligible Bondholders hold their Bonds and to the
right of the Issuer to amend or withdraw the Proposal, as described
in this Consent Solicitation Memorandum.
Eligible Bondholders are advised to check with any bank,
securities broker or other intermediary through which they hold
their Bonds when such intermediary would need to receive
instructions from an Eligible Bondholder in order for such Eligible
Bondholder to participate in, or (in the limited circumstances in
which revocation is permitted) to validly revoke their instruction
to participate in, the Proposal and/or otherwise vote in respect of
the Extraordinary Resolution before the deadlines specified above.
The deadlines set by any such intermediary and each Clearing System
for the submission and (where permitted) revocation of Electronic
Voting Instructions will be earlier than the relevant deadlines
above.
Further Information
Requests for information in relation to the Proposal should be
directed to the Sole Solicitation Agent at:
Centrus Financial Advisors Limited
Senator House
85 Queen Victoria Street
London EC4V 4AB
Attention: Philip Jenkins
Telephone: +44 (0)7788 209354
Email: phil.jenkins@centrusadvisors.com
Requests for information in relation to the submission of an
Electronic Voting Instruction should be directed to the Tabulation
Agent at:
Kroll Issuer Services Limited
The Shard
32 London Bridge Street
London SE1 9SG
Attention: Owen Morris / Harry Ringrose
Telephone: +44 (20) 7704 0880
Email: swan@is.kroll.com
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of the
Market Abuse Regulation (EU) No. 596/2014 (MAR) as implemented into
UK law by virtue of the European Union (Withdrawal) Act 2018 (as
amended), as supplemented by the Markey Abuse (Amendment) (EU Exit)
Regulations (SI 2019/310) (UK MAR) until the release of this
announcement.
This announcement is released by Swan Housing Capital plc and
contains inside information for the purposes of UK MAR,
encompassing information relating to the Proposal described above.
For the purposes of UK MAR, this announcement is made by Susan
Hickey (Chief Executive).
Disclaimer
This announcement must be read in conjunction with the Consent
Solicitation Memorandum that contains important information which
should be read carefully before any decision is made with respect
to the Proposal. If any Bondholder is in any doubt as to the action
it should take, it is recommended to seek its own financial and
legal advice, including in respect of any tax consequences,
immediately from its broker, bank manager, solicitor, accountant,
independent financial, tax or legal adviser authorised under the
Financial Services and Markets Act 2000 (the FSMA) (if in the
United Kingdom) or other appropriately authorised financial
adviser. Any person whose Bonds are held on its behalf by a broker,
dealer, bank, custodian, trust company or other nominee must
contact such entity if it wishes to participate in the
Proposal.
Solicitation and Distribution Restrictions
Neither this announcement nor the Consent Solicitation
Memorandum constitutes an invitation to participate in the Proposal
in any jurisdiction in which, or to any person to whom, it is
unlawful to make such invitation or for there to be such
participation under applicable securities laws. The distribution of
this announcement and the Consent Solicitation Memorandum in
certain jurisdictions may be restricted by law. Persons into whose
possession this announcement and the Consent Solicitation
Memorandum comes must inform themselves about and observe any such
restrictions.
This announcement and the Consent Solicitation Memorandum have
not been filed with, or reviewed by, any national or local
securities commission or regulatory authority of any jurisdiction,
nor has any such commission or authority passed upon the accuracy
or adequacy of this announcement or the Consent Solicitation
Memorandum. Any representation to the contrary is unlawful and may
be a criminal offence.
This announcement and the Consent Solicitation Memorandum do not
constitute an offer to buy or a solicitation of an offer to sell
the Bonds, and the Proposal will not apply to Bondholders in any
jurisdiction in which the Proposal is unlawful.
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END
DOCPPGUUPUPPGMG
(END) Dow Jones Newswires
December 21, 2022 12:01 ET (17:01 GMT)
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