International law firm Freshfields Bruckhaus Deringer has advised The Royal Bank of Scotland on a novel refinancing solution for UK based holiday provider Center Parcs that has blended a whole business securitisation (“WBS”) with a high-yield bond, allowing Center Parcs to refinance its existing debt structure whilst in addition raising a development finance loan to fund the development of Center Parcs’ new holiday village at Woburn.
The blending of a £740 million WBS with the issuance of a £280 million high-yield bond out of the same issuing structure, is the first of its kind in Europe The combined proceeds will refinance the group’s existing commercial mortgage backed securities (“CMBS”) and subordinated debt, with the WBS/high yield bonds being backed by the existing four Center Parcs sites across the UK.
Marcus Mackenzie, Partner, commented “Center Parcs’ strong ongoing performance, which despite the challenging macro-economic environment has seen occupancy rates of over 97% throughout 2011 and record advance bookings for 2012, made this deal possible. Through using a WBS and a high-yield bond Blackstone and Center Parcs have put together a truly innovative financing package that repays its existing debt whilst allowing funds to be raised for expansion and growth. This type of solution is something we expect to see more of in the future as it should be a very attractive way of securing financing for real-estate asset rich companies which are currently financed through a CMBS which is coming to the end of its life.” Simone Bono, high yield partner, added that “combining investment grade bonds with a high yield tranche allowed Center Parcs to maximize its investor base and we expect to see more transactions that use a range of options to achieve a successful financing solution.”
Freshfields acted for The Royal Bank of Scotland PLC (RBS) which was global co-ordinator and arranger on the deal with Barclays Capital, HSBC Holdings Plc and Lloyds Banking Group Plc acting as joint lead-managers on the WBS and High Yield bond offerings.
The Freshfields team on the WBS was led by structured finance partner Marcus Mackenzie and was assisted by banking partner Simon Johnson and associates Mandeep Lotay , Helen Jones, Alistair Lewis, Jenny McIvor, Bronwen Whitehead, Max Lang and Susan Wamanga-Wamai. Tax partner Murray Clayson and associate Claire Osborne real estate partner Annette Byron and associates Quynh Nguyen and Charles Mieville and planning and environment associate Vanessa Jakovich also advised. On the high-yield bond, US securities partner Simone Bono advised assisted by Denise Ryan and Taylor Souter. HSBC Corporate Trustee Company (UK) Limited acted as trustee on the transaction and was advised by Freshfields partner Chris Barratt and associate Sabah Nawaz.
Freshfields partners David Trott and Jane Jenkins oversaw the development financing solution for the new Center Parcs holiday village to be built at Woburn Forest in Bedfordshire. The new money facility will allow Center Parcs to add a completely new holiday village to their UK offering and is scheduled to open in the summer of 2014.
Commenting on the development facility, Freshfields banking partner David Trott said “We are delighted to have helped the four UK clearing banks in providing this new money development facility to Center Parcs. It shows that even in these difficult markets, with the right credit story and structure, there is capital and liquidity available.” Construction partner Jane Jenkins added, “Our experience in major development projects helped us formulate a solution for the Banks tailored to Center Parcs construction arrangements that answered their needs. It has been particularly satisfying to close a deal for development financing for a new development as opposed to restructuring in markets which have been so difficult over recent times.”
Freshfields acted for the mandated arrangers, The Royal Bank of Scotland PLC, HSBC Bank plc, Barclays Bank PLC and Lloyds TSB Bank plc.
The Freshfields team on the development facility was led by banking partner David Trott, who was assisted by Barbara Mollin, Gautham Srinivas and Ben Kanter. Construction partner Jane Jenkins was assisted by Stephanie Adams and Liam Hart. Tax partner Colin Hargreaves and real estate partner Annette Byron also advised, assisted by Susanna Brain and Quynh Nguyen and Charles Mieville, respectively. Vanessa Jakovich advised on planning and environmental issues.
