Marble Arch seeks consents to amend nine mortgage-backed note series

By Susanna Moon

Chicago, Oct. 14 – Marble Arch Residential Securitisation No. 4 plc said it began a consent solicitation for a number of series of notes.

The issuer has been requested by Lloyds Bank plc, the liquidity facility provider, at the liquidity facility provider's cost, to put to the noteholders a request to agree to amendments to the liquidity facility agreement, according to a company notice.

Noteholder meetings will be held in London on Nov. 12 for the following series:

• Class A3c £231 million mortgage-backed floating-rate notes due March 2040;

• Class B1a €36.4 million mortgage-backed floaters due March 2040;

• Class B1b $27.1 million mortgage-backed floaters due March 2040;

• Class B1c £20 million mortgage-backed floaters due March 2040;

• Class C1a €43.45 million mortgage-backed floaters due March 2040;

• Class C1c £15 million mortgage-backed floaters due March 2040;

• Class D1a €20.7 million mortgage-backed floaters due March 2040;

• Class D1c £26 million mortgage-backed floaters due March 2040; and

• Class E1c £25.2 million mortgage-backed floaters due March 2040.

The final voting deadline is Nov. 10, with noteholder meetings set for Nov. 12.

The proposed amendments would reduce the costs paid by the issuer to the liquidity facility provider under the liquidity facility agreement, according to the notice.

The costs saved will result in additional revenue that the issuer could use to make payments to noteholders and this may benefit this transaction by improving interest coverage and reduce any need in the future to draw on the liquidity facility, the notice explained.

The liquidity facility agreement provides for a commitment fee and interest on the standby drawing based on the amount available or the amount drawn of the commitment. The commitment fee is 76.48 basis points per year, which includes increased costs relating to Basel II and ILAS rules for the available commitment.

The commitment fee may go up further if regulatory requirements impose higher costs on the provision of the liquidity facility.

Also, the commitment fee and the standby draw margin step up by 20 bps in December.

The consent fee for the first proposed amendments will be 20 bps for the class A notes, 30 bps for the class B notes, 40 bps for the class C notes, 50 bps for the class D notes and 60 bps for the class E notes.

Noteholders may vote independently for or against each extraordinary resolution and a consent fee will be paid separately for votes in favor of each extraordinary resolution.

The consent fee for the second proposed amendments will be 10 bps for each notes series.

The liquidity facility provider notes that the commitment under the liquidity facility was sized at £60.9 million being 8% of the sterling-equivalent principal amount outstanding of the collateral-backed notes at closing.

More details

The first proposed amendments are to reduce the size of the commitment to a dynamic level of 12% of the aggregate sterling-equivalent principal amount outstanding of the collateral-backed notes and to remove the conditions to reducing the commitment, the notice said.

The cost savings of doing so would be about £530,000 in the first year in fees payable to the liquidity facility provider if the standby drawing remains in place, or about £384,000 if there is no standby drawing exists.

Also, the standby drawing annually costs the issuer £60.9 million at Libor plus 76.48 bps, increasing in December to Libor plus 96.48 bps.

The second proposed amendments are to amend the rating trigger for the standby drawing to reflect the current published criteria of the rating agencies.

The amendments would require the issuer to repay the standby drawing to the liquidity facility provider.

The repayment of the standby drawing as proposed and if the liquidity facility remains at its existing size will save the issuer in the first year the equivalent of about £263,000 per year (based on a Libor rate of 52 bps and that the return to the issuer on the deposit is Libor minus 40 bps) and £117,000 in the first year per year if the liquidity facility is resized under the first proposed amendment.

Noteholders may vote independently on the first proposed amendments and the second proposed amendments and the passing of the first extraordinary resolution and implementation of the first proposed amendments is not conditional on the second extraordinary resolution being passed and the second proposed amendments being implemented and vice versa.

Lucid Issuer Services Ltd. (mars@lucid-is.com, fax +44 (0) 20 7067 9098, attn: Victor Parzyjagla) is the tabulation agent.

The principal paying agent is Bank of New York Mellon, London Branch (fax 44 0 20 7964 6399). The U.S. paying agent is The Bank of New York Mellon (212 815-5915).

The Irish paying agent is AIB/BNY Fund Management (Ireland) Ltd. (fax: 44 0 207 964 6399).

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