Swan Housing seeks consents from holders of £250 million 3 5/8% bonds

By Wendy Van Sickle

Columbus, Ohio, Dec. 21 – Swan Housing Capital plc is soliciting consents from holders of the £250 million of 3 5/8% secured bonds due 2028 (ISIN: XS1195576233), according to a news release.

The issuer is asking bondholders to waive the failure of Swan Housing Association Ltd., which was the recipient of the bond proceeds, to deliver to the trustee the consolidated audited financial statements for the financial year ended March 31, 2022, to waive the failure of the issuer to deliver its balance sheet, profit and loss account and report for the same financial year and to consent to the replacement of the requirement in the March 15, 2015 loan agreement to provide.

The issuer said it has discussed the proposal with eligible holders of 80% of the outstanding bonds, and, after reviewing the proposal, these majority bondholders said they find the proposal acceptable and plan to vote in its favor, but there is no assurance this will happen.

The issuer is offering an early voting fee of £1.00 for each £1,000 principal amount of bonds to holders who deliver valid electronic voting instructions, regardless of whether the instructions are for or against the extraordinary resolution containing the proposals, by 11 a.m. ET on Jan. 9. However, the fee will be paid only if the required consents are received, a supplemental bond trust deed and a supplemental loan agreement are executed and the Sanctuary acquisition closes.

To be eligible to receive the early voting fee, a bondholder who delivers an electronic voting instruction must not attend or seek to attend the meeting in person or make arrangements to be represented at the meeting.

The final expiration time to revoke electronic voting instructions will be 11 a.m. ET on Jan. 12.

The meeting will be held at 7 a.m. ET on Jan. 17, with results announced later that day.

Settlement is expected to be no later than April 4.

Centrus Financial Advisors Ltd. (+44 7788 209354 or phil.jenkins@centrusadvisors.com) is the solicitation agent.

Kroll Issuer Services Ltd. (+44 20 7704 0880 or swan@is.kroll.com) is the tabulation agent.

Background

Swan Housing Association has encountered significant challenges during the year in its commercial operations, including cost overruns and delays to works leading to slower sales, according to the notice. As a result Swan Housing Association’s debt has increased.

It was announced on Dec. 10, 2021, that Swan Housing Association would pursue a merger with Orbit Group, with the proposal being for Swan Housing Association to join the Orbit group as a subsidiary. In January 2022, Orbit advanced a secured loan of £25 million, which was subsequently increased to £40 million in March 2022.

After discussions, it was confirmed in late September that the merger would not go forward.

Swan Housing Association and Sanctuary Housing Association then entered into talks regarding a potential transaction which, if consummated, would involve Swan Housing Association becoming a subsidiary of Sanctuary. That combination is subject to obtaining appropriate consents and satisfactorily concluding commercial discussions with third parties.

In the interim the parties have entered into a managed service agreement whereby Sanctuary will manage Swan Housing Association, and Sanctuary Affordable Housing Ltd. has provided Swan Housing Association with a secured loan of £50 million, which has been used to repay the loan from Orbit in full and as additional liquidity.

The issuer is based in England.

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