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

By Susanna Moon

Chicago, Dec. 19 – Marble Arch Residential Securitisation No. 3 Ltd. said it began a consent solicitation for two 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 Jan. 23 for the two note series:

• Class A1a £132 million mortgage-backed floating-rate notes due 2037; and

• Class A1b €221 million mortgage-backed floating-rate notes due 2037.

Lucid Issuer Services Ltd. (Victor Parzyjagla, +44 0 20 7704 0880 or email mars@lucid-is.com) is the tabulation agent.

The consent fee for the first proposed amendments is 0.2%. The consent fee for the second proposed amendments is 0.1%.

Resizing of liquidity facility

The commitment under the liquidity facility was sized at £16.25 million, subject to being decreased where the commitment is in excess of 10% of the sterling equivalent principal amount outstanding of the notes, according to a company notice.

The commitment may be decreased on each interest payment date to the greater of an amount equal to 10% of the sterling equivalent principal amount outstanding of the notes and £3.25 million, provided that no reduction occurs unless confirmation is received from the rating agencies that it will not adversely affect the ratings of the notes outstanding.

The sterling equivalent principal amount outstanding of the notes has reduced significantly since the issue date.

The first proposed amendments are

• To reduce the size of the commitment, or the size of any standby drawing, to a dynamic level of 12% of the aggregate sterling equivalent principal amount outstanding; and

• To remove the conditions to reducing the commitment. The liquidity facility provider believes the size of the commitment will give a significant cushion over the 10% level, which would be effective if the transaction met all the relevant conditions, the notice said.

The liquidity facility provider estimates that setting the commitment, or any standby drawing, to a dynamic level of 12% of the aggregate sterling equivalent principal amount outstanding would save the issuer about £163,000 in the first year in fees payable to the liquidity facility provider if the standby drawing remains in place, or about £113,000 if there is no standby drawing. Both scenarios are based on a Libor rate of 52 bps and a return to the issuer on the deposit of Libor minus 45 bps and no further advances drawn by the issuer under the liquidity facility agreement.

Reversal of standby drawing

The liquidity facility provider notes that the standby drawing costs the issuer an annual amount of £16.25 million times Libor plus 101.48 bps. This is higher than the costs of the issuer under the liquidity facility agreement if no standby drawing is made when only the commitment fee of 101.48 bps per year is payable and may rise if Libor increases.

The second proposed amendments are to amend the rating trigger for the standby drawing to reflect the current published criteria of the rating agencies and to cater for the repayment of the standby drawing where the liquidity facility provider has the required ratings.

These amendments would oblige the issuer to repay the standby drawing to the liquidity facility provider under the terms of the liquidity facility agreement.

The liquidity facility provider estimates that 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 £73,000 per annum, based on a Libor rate of 52 bps and return to the issuer on the deposit of Libor minus 45 bps, and £23,000 per annum in the first year if the liquidity facility is resized under the first proposed amendment.

Other offer details

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 conditioned on the second extraordinary resolution being passed and the second proposed amendments being implemented and vice versa.

The final voting deadline will be Jan. 21.

The principal paying agent is Bank of New York Mellon, London Branch (corporate trust administration, structured finance, fax +44 0 20 7964 6399).

The tabulation agent is Lucid Issuer Services Ltd. (corporate trust administrator, fax 44 0 207 964 6399, Victor Parzyjagla, +44 0 20 7704 0880, email mars@lucid-is.com or fax +44 0 20 7067 9098).

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