CPUK Finance receives required consents to amend its class A notes

By Sarah Lizee

Olympia, Wash., Aug. 10 – CPUK Finance Ltd. announced that the resolutions proposed under the consent solicitation for its class A notes have been passed by the requisite majority of the holders of the notes.

As previously reported, the consent solicitation for its class A notes includes the £440 million 7.239% class A2 fixed-rate secured notes due 2042, the £340 million 3.588% class A4 fixed-rated secured notes due 2042 and the £379.5 million 3.69% class A5 fixed-rate secured notes due 2047, according to an announcement.

The issuer sought headroom in light of the global pandemic and the closure of five of its holiday parks in the United Kingdom. To that end, the issuer is seeking to waive the requirement of compliance with the class A FCF DSCR covenant in respect of the financial covenant test dates in August, February 2021 and August 2021.

The company sought approval of noteholders to a waiver regarding the class A issuer-borrower loan agreement.

And, the company sought amendments to the class A issuer-borrower agreement and the intercreditor agreement, subject to satisfaction of the consent condition.

Brookfield

When the pandemic started, CPUK had roughly £24.1 million of cash and access to a £90 million committed, undrawn liquidity facility.

Brookfield, a key investor, has approved £160 million of financial support.

In April, Brookfield provided the group with £41.5 million and a further £27.5 million in May by way of equity injections. Brookfield also provided a subordinated interest-free unsecured loan of £70 million for working capital purposes, including for debt service.

Class A waiver proposal

The issuer asked noteholders to approve an ordinary resolution permitting a waiver in respect of the class A issuer-borrower loan agreement.

The issuer also sought approval of noteholders, by way of an extraordinary resolution, to some amendments to the class A issuer-borrower loan agreement and the intercreditor agreement.

In light of the government’s measures to manage the spread and impact of the Covid-19 pandemic and the resulting closure of the holiday parks, the obligor group sought a waiver of the requirement to comply with a covenant in respect of the financial covenant test dates falling in August 2020, February 2021 and August 2021.

Additionally, if, on any loan interest payment date, the obligors fail to pay the full amount due in respect of the class B loans, the waivers of the requirement to comply with the covenant on the financial covenant test dates will immediately cease to be effective.

Amendment proposals

To address the possibility that the obligor group is required to close or reduce the capacity at one or more of the holiday parks between now and the financial covenant test date falling in February 2022, CPUK sought to amend the basis on which free cash flow is calculated on such test date to allow the obligor group to address any potential breach of the free cash flow covenant arising as a result.

For the period of the financial covenant test dates falling in August 2020, February 2021 and August 2021, the obligor group will not make any class A restricted payment or use any cash generated to make any payments in respect of the class B loans or purchase any class B notes.

The obligor group also sought to make an amendment so that, for the period in which the waiver of the class A covenant is in place, in addition to being able to make class B payments using new equity funds, it will also be the case that it can make payments out of the proceeds of new class B loans, subject to a cap of £75 million for the purposes of payments of interest on the class B loans.

Class B consent solicitation

The issuer and the obligor group agent also launched a consent solicitation for the class B notes. For the same reasons as outlined above, the obligor group agent is seeking to temporarily suspend the calculation of the class B free-cash flow covenant for the same test dates and to adjust the basis on which this covenant is calculated for the purposes of the test date in February 2022 to ensure that such calculation is not adversely affected by any enforced closure of or operational restrictions in respect of the holiday parks.

The class B noteholders are being asked to consider and approve the resolution set out in the class B consent solicitation, voting as a single class.

The amendments contemplated under the consent solicitation will be automatically terminated if the interest due and payable under the class B loans is not paid in full on any loan interest payment date during the period in which such waivers and amendments apply.

Instruction fee

Subject to some conditions, class A noteholders who delivered voting instructions in favor of or against the resolutions and did not revoke such instructions before the early instruction deadline, 11 a.m. ET on July 30, will be eligible to receive a fee equal to 0.1% of the principal amount outstanding of the notes that are the subject of the relevant electronic voting instruction.

The deadline for receipt of electronic voting instructions was 11 a.m. ET on Aug. 7.

Barclays Bank plc (+44 20 3134 8515 or eu.lm@barclays.com) is the solicitation agent.

Lucid Issuer Services (+44 20 7704 0880 or centerparcs@lucid-is.com) is the tabulation agent.

Center Parcs runs forest villages for short-break holidays and is based in Newark, England.

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