Trafford Centre solicits consents for security, debt releases from holders of several notes

By Wendy Van Sickle

Columbus, Ohio, July 31 – Trafford Centre Finance Ltd. is soliciting consents from holders of several series of secured notes, according to notice announcing upcoming meetings.

The notes include the following class A notes:

• £340 million class A2 6.5% secured notes due 2033 (ISIN: XS0108039776); and

• £188.5 million class A3 floating-rate secured notes due 2038 (ISIN: XS0222488396).

The notes include the following class B notes:

• £120 million class B 7.03% secured notes due 2029 (ISIN: XS0108043968);

• £20 million class B2 floating-rate secured notes due 2038 (ISIN: XS0222489014); and

• £20 million class B3 4.25% secured notes due 2029 (ISIN: XS1031629808).

The notes include the following class D notes:

• £69.55 class D1(N) floating-rate secured notes due 2035 (ISIN: XS0222489873); and

• £70 million class D3 4.75% secured notes due 2029 (ISIN: XS1031633313).

Background

The group to which the issuer belongs, headed by Trafford Centre Group (UK) Ltd., was until the administration of Intu Properties plc, in a U.K. real estate investment trust regime, which came to an end as a result of circumstances arising out of the insolvency of the group headed by Intu Properties. The Trafford group is now proposing to make changes to enable it to elect into a U.K. REIT regime again and thereby optimize its tax structure.

The Trafford group is ultimately owned by the Canadian Pension Plan Investment Board. The board, and its subsidiary CPP Investment Board Real Estate Holding Inc., have funded the Trafford group through the recent period which comprised the Covid-19 pandemic and the insolvency of the Intu Parent group in June 2020. They wish to now reinstate the REIT status of the Trafford group.

There are a number of strategic reasons driving the decision-making around reinstating the REIT structure. Firstly, REITs are exempt from corporation tax on property rental profits. Given the projected future taxable rental profits of the Trafford group (taxable at 25% from April 2023), the tax exemption of the REIT regime should provide a substantial corporation tax saving for Trafford Centre Ltd. As a precursory step to the proposed entry into the REIT regime, the Canadian Pension Plan Investment Board has already written off and released the Trafford group from around £138 million of secured debt.

Trafford Centre Ltd. and/or the issuer are requesting a security release and a debt release by way of extraordinary resolutions and are convening separate meetings for each class of noteholders to consider and vote upon those resolutions. If approved by the noteholders of a class of the notes, the relevant extraordinary resolution will be binding on all holders of that class.

The members of a special committee, who hold in aggregate about 57% of the current total principal amount outstanding of the notes, have examined the noteholder proposal and have informed the issuer that they find the proposal acceptable, according to the announcement.

The meetings will be held in London on Aug. 22, with the first one for the class A noteholders to be held at 5 a.m. ET with the others to follow in five-minute intervals or after the completion of the preceding meeting.

Holders who have validly delivered consent instructions by 11 a.m. ET on Aug. 18 need take no further action to be represented at the meeting.

Eligible holders who deliver valid consent instructions may, subject to conditions including that each extraordinary resolution is passed, be eligible to receive a work fee of 5 basis points of the principal amount of their notes. An eligible noteholder must be a non-U.S. person under Regulation S, an eligible counterparts or professional client or a person to whom the solicitation may be lawfully made.

Ineligible holders may be eligible to receive an amount equivalent to the work fee if they deliver an ineligible noteholder instruction to the tabulation agent by 11 a.m. ET on Aug. 16.

To achieve a quorum at any meeting, at least two or more persons representing a clear majority of the total amount of relevant notes must be represented. For passage, each resolution requires an affirmative vote from a majority consisting of not less than three-fourths of the votes cast.

City & Continental Ltd. (+44 20 3039 3464 or theo.king@alliacc.com) is the solicitation agent.

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

The owner and developer of real estate properties has headquarters in the Cayman Islands.

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