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London Underground pays put option price on £1.03 billion Metronet bonds
By Laura Lutz
Des Moines, Feb. 13 - London Underground Ltd. placed £1.24 billion into escrow to fund the put option price on £1.03 billion of bonds from Metronet SSL Finance plc and Metronet Rail BCV Finance plc, according to four Metronet news releases.
The affected bonds are Metronet SSL's £350 million of 5.309% guaranteed secured bonds due 2032 and £165 million of 2.8756% index-linked guaranteed secured bonds due 2032 and Metronet BCV's £350 million of 5.305% guaranteed secured bonds due 2032 and £165 million of 2.876% index-linked guaranteed secured bonds due 2032.
London Underground paid £378.23 million for the 5.309% bonds, £234.73 million for the 2.8756% bonds, £382.09 million for the 5.305% bonds and £240.82 million for the 2.876% bonds.
The escrowed funds were deposited in the names of the bond trustee and the guarantors, Financial Security Assurance (U.K.) Ltd. for the 5.309% and 2.876% bonds and Ambac Assurance UK Ltd. for the 5.305% and 2.8756% bonds.
The guarantors may choose either to continue scheduled principal and interest payments or to accelerate payment.
Ambac and Financial Security Assurance said in separate news releases that, while they evaluate options, the funds will be invested in U.K. government securities, short-term instruments or deposits with a rating of A-1 or better by S&P and P-1 or better by Moody's, or other investments agreed to by the trustee and guarantors.
London-based Metronet operates part of the London Underground under Public Private Partnership contracts. The affected debt was issued to finance operation and maintenance of asset upgrades for the system.
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