Silverstone seeks holder approval to amend mortgage-backed notes

By Jennifer Chiou

New York, Oct. 3 – Silverstone Master Issuer plc said it will seek approval for extraordinary resolutions from holders of the following series of its mortgage-backed floating-rate and fixed-rate notes:

• £650 million of series 2009-1 class A3 mortgage-backed floating-rate notes due 2055;

• €1.1 billion of series 2010-1 class A2 mortgage-backed floating-rate notes due 2055;

• $300 million of series 2010-1 class A3 mortgage-backed floating-rate notes due 2055;

• £170 million of series 2011-1 class 2A mortgage-backed floating-rate notes due 2055;

• $500 million of series 2011-1 class 4A mortgage-backed fixed-rate notes due 2055;

• $1 billion of series 2012-1 class 1A mortgage-backed floating-rate notes due 2055;

• $1.05 billion of series 2012-1 class 2A1 mortgage-backed floating-rate notes due 2055; and

• £200 million of series 2012-1 class 2A2 mortgage-backed floating-rate notes due 2055.

The noteholder meeting will be held on Oct. 27 in London.

According to a filing with the London Stock Exchange, Nationwide Building Society holds numerous series of notes, including the issuer’s series 2009-1 class Z notes and the series 2010-1 class Z notes, and intends to vote in favor of the proposal, but Nationwide Building Society is not formally entitled to have its vote count toward the proposed extraordinary resolutions.

Nationwide is seeking to minimize contingent liquidity related costs, encumbrance and potential future increases to Nationwide Group counterparty credit risk, while optimizing and improving the efficiency of the residential mortgage-backed note program via the extraordinary resolution.

Silverstone specifically is seeking approval to amend the terms and conditions of the notes to, among other things,

• Update rating agency counterparty criteria for the account banks in line with the latest ratings criteria;

• Bring to date the account bank replacement provisions to permit Nationwide to continue to act as an account bank upon downgrade provided it collateralizes amounts on deposit in the relevant accounts, permit Nationwide to enter into panel bank arrangements at the funding 1 level and require Nationwide to open a standby mortgages trustee GIC account with a third-party bank upon downgrade;

• Permit Silverstone to issue class Z GIC collateral notes structured as variable funding notes providing Nationwide with a mechanism for collateralizing amounts on deposit; and

• Allow Nationwide to repurchase no more than £8,088,403,586 aggregate outstanding principal balance of surplus loans following redemption of £9.5 billion aggregate of retained series 2011-1 class 3A notes.

Both Moody’s Investor Service and Fitch Ratings have reviewed the noteholder proposal and stated that they expect no negative rating action because of the proposal.

If the resolution is approved, holders who have sent electronic voting instructions by the early deadline will receive an incentive fee of 0.05%. No fee will be paid unless the proposal is executed.

The early voting deadline is 11 a.m. ET on Oct. 20, and the final deadline is 5 a.m. ET on Oct. 23.

Citigroup Global Markets Ltd. is the solicitation agent (44 20 7986 8969 or liabilitymanagement.europe@citi.com). The information and tabulation agent is Citibank, NA, London Branch (44 20 7508 3867 or exchange.gats@citi.com).

The issuer is based in London.

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