Debenture

 

The Group recently tendered its £142.9 million 5.625% First Mortgage Debenture Stock due January 2029. The tender offer achieved approximately 85% take-up (£121.0 million nominal) at a cash cost of £159.5 million, leaving a revised nominal value at 31 March 2018 of £21.9 million. Details of the tender offer can be found here:

Debenture Offer Results

Under the terms of the debenture, the Group is required to charge a pool of properties.

The Group is required to provide the following information in respect of the charged properties to Royal Exchange Trust Company Limited (as trustee) on an annual basis:

  • a third party valuation of the properties; and
  • a report by the auditors on the net annual income arising from the properties.

If the above information shows that:

  • the aggregate value of the properties is more than one and two-thirds times the aggregate nominal amount of the Stock; and
  • the net annual income arising from the properties is not less than the gross annual interest on the Stock,

the Group may withdraw charged properties from the security pool provided that these tests continue to be met.

If the above information shows that:

  • the aggregate value of the properties is less than one and one-half times the aggregate nominal amount of the Stock; or
  • the net annual income arising from the properties is less than the gross annual interest on the Stock,

the Group is obliged to provide additional security so that the aggregate value of the properties is a minimum of one and two-thirds times the aggregate nominal amount of the Stock, and the net annual income arising from the properties is a minimum of the gross annual interest on the Stock. 

The Group has the right to substitute security pool properties for others of at least equal value and income.

As at 31 March 2018 (annual covenant), the security pool properties were valued by CBRE at £388.4 million with a net annual income, reviewed by Deloitte, of £13.2 million. This gives rise to an asset cover ratio and an income cover ratio of 17.7 times and 10.7 times respectively.

The following properties were included within the security pool as at 31 March 2018:

  • Wells & More, 45 Mortimer Street, London W1;
  • Kent House, 14/17 Market Place, London W1;
  • Elsley House, 20/30 Great Titchfield Street, London W1;
  • 27/35 Mortimer Street and 7-12 Booth’s Place, London W1.

Due to the success of the tender process, the Group plans to remove some of the above properties from the security pool over the course of the next few months.

 

Trustee 

Royal Exchange Trust Company Limited 
4th Floor 
40 Duke's Place 
London EC3A 7NH

Registrar

Link Market Services Limited
The Registry
Beckenham
Kent BR3 4TU

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