Proposed Discounted Repayment

RNS Number : 5082V

Invista Foundation Property Tst Ltd

10 July 2009

 

10 July 2009

INVISTA FOUNDATION PROPERTY TRUST LIMITED (THE "COMPANY ") 

PROPOSED PARTIAL DISCOUNTED REPAYMENT OF BORROWINGS

The Company announces that a proposed discounted tender offer has been posted to the Irish Stock Exchange today through which it is seeking to potentially commit up to £55 million towards the repayment of existing borrowings at a discount, including any swap breakage costs and other related costs.  

As explained further below, the exact level of principal repayment and discount which will be achieved through this exercise will only be capable of being determined at the conclusion of the exercise. The Company will make a further announcement at that time to give details of the final position achieved.

The Company's current financing arrangements involve a wholly owned subsidiary company, Invista Foundation Holding Company Limited, borrowing from a securitisation vehicle, Real Estate Capital (Foundation) Limited ("RECFL"), which has in turn issued £266,500,000 Class A Secured Floating Rate Notes due 2016 (the "Notes") (ISIN: XS0210882428 and Common Code: 021088242). The current outstanding principal amount is £213,500,000.

The full text of the proposed discounted tender offer announcement made by RECFL to the Irish Stock Exchange today, is replicated below.

For further information please contact:

Invista Real Estate Investment Management Duncan Owen	020 7153 9300
Northern Trust David Sauvarin	01481 745529
Financial Dynamics Dido Laurimore / Rachel Drysdale	020 7831 3113

Company name: Real Estate Capital (Foundation) Limited 

Headline: Invitation for offers to sell Notes

IRISH STOCK EXCHANGE ANNOUNCEMENT

For Immediate Release                                                                                                       10 July 2009

REAL ESTATE CAPITAL (FOUNDATION) LIMITED 

(the "Issuer")

£266,500,000 Class A Secured Floating Rate Notes due 2016

ISIN XS0210882428

Real Estate Capital (Foundation) Limited (the "Issuer") hereby announces that it is inviting holders of the £266,500,000 Class A Secured Floating Rate Notes due 2016 (the "Notes") (ISIN: XS0210882428 and Common Code: 021088242) to submit offers to sell to the Issuer their Notes for cash.  The Issuer separately invites the Noteholders to consider, if thought fit, pass the Extraordinary Resolution upon the terms and subject to the conditions contained in the Invitation Memorandum. The Issuer will determine the Purchase Price for the Notes and the aggregate principal amount of Notes to be purchased based on a modified Dutch auction procedure (the "Invitation").  

The Invitation is made on the terms and subject to the conditions contained in the invitation memorandum dated 10 July 2009 (the "Invitation Memorandum").  Capitalised terms used in this announcement have the meanings ascribed to them in the Invitation Memorandum.  

Description of the Notes	Primary Tranche Notional Amount Outstanding	Primary Tranche Principal Amount Outstanding	ISIN/Common Code	Maturity Date	Minimum Purchase Price per £1,000 in Principal Amount Outstanding	Maximum Purchase Price per £1,000 in Principal Amount Outstanding	Maximum Invitation Amount	Consent Payment per £1,000 Principal Amount Outstanding
£266,500,000 Class A Secured Floating Rate Notes due 2016	£250,000,000	£213,500,000	XS0210882428/021088242	15 July 2016	£650	£750	£75,000,000 principal amount outstanding	£1

The principal amount outstanding of the Primary Tranche of the Notes is £213,500,000, but their nominal value is £250,000,000. The Purchase Price will be determined by reference to the principal amount outstanding of the Notes and not the nominal amount of the Notes.

Rationale for the Invitation

Pursuant to the terms of a credit agreement between, inter alios, the Issuer and Invista Foundation Holding Company Limited (formerly known as Insight Foundation Holding Company Limited) (the "Borrower") dated 23 March 2005 (as amended, restated or supplemented from time to time) (the "Credit Agreement"), the Issuer granted a number of loan facilities to the Borrower. It is proposed that the Issuer will fund the purchase of the Notes from the partial prepayment of a loan advanced by the Issuer to the Borrower under the Credit Agreement (the "Term Loan"). 

The prepayment of the Term Loan will be made by using up to £55,000,000 funded to approximately 85% from the "Property Account" and to approximately 15% from the "Working Capital Account". If these funds were not used to prepay the Term Loan, then, subject to the terms of the Credit Agreement, (i) amounts in the Property Account could, among other things, be released from the structure (provided that the Cash Release Ratio (as defined in the Credit Agreement) is satisfied) or be used by the Borrower to acquire further properties, and (ii) amounts in the Working Capital Account could otherwise be withdrawn from the structure for a number of purposes, including the payment of dividends or the repayment of subordinated debt by the Borrower. It is likely that these possible alternative uses of such funds would have the effect of increasing the Borrower's leverage.

The use of cash standing to the Property Account and the Working Capital Account will reduce the value of the security package which is ultimately available to the Note Trustee (and which the Note Trustee holds on trust for the Noteholders and other secured parties).

However, assuming that all other relevant factors are constant following the purchase of the Notes in accordance with the terms of the Invitation Memorandum, Noteholders who retain their holdings may benefit from (i) a more than corresponding reduction in the amount owed by the Borrower under the Credit Agreement to the Issuer, (ii) a reduction in the leverage in the structure (whilst maintaining the existing characteristics of the property pool by reducing need for further property sales to reduce the leverage in the structure), (iii) an increase in the Interest Cover Ratio (as defined in the Credit Agreement) which would mitigate against tenant default risk and vacancies in relation to the property pool, and (iv) an improvement in the Loan to Value Financial Ratio (as defined in the Credit Agreement).

The Issuer will use the proceeds of the partial prepayment to (i) pay the aggregate Purchase Price for the Notes that have been purchased (together with accrued and unpaid interest in relation to such Notes), (ii) pay the Swap Counterparty any swap breakage costs in accordance with the terms of the Swap Agreement and the Swap Agreement Side Letter, (iii) pay each of the Noteholders that voted in favour of the Extraordinary Resolution, the Consent Payment, and (iv) pay all costs associated with the Invitation. The aggregate amount paid by the Issuer in respect of (i) to (iv) above will be less than the aggregate principal amount outstanding of the Notes purchased by the Issuer. All Notes so purchased by the Issuer shall be cancelled forthwith by the Issuer.

Transaction Conditions

There is no obligation on the Issuer to purchase any of the Notes offered for sale. Each Offer is made by Noteholders conditional on the satisfaction of the Conditions in (i) to (iv) below (the "Transaction Conditions") and, accordingly, the Issuer will only accept an Offer if each of the Transaction Conditions is satisfied.  

The Transaction Conditions in respect of the Issuer's acceptance of an Offer are:

(i)   the Conditions of the Notes having been amended and all other relevant documents having been executed 
      as described in the Extraordinary Resolution;

(ii)  the Extraordinary Resolution having been passed at the Meeting;

(iii) receipt of sufficient funds by the Issuer through the repayment by the Borrower in part of the loan to the 
      Borrower; and

(iv) receipt of written confirmation from S&P that the then current ratings of the Notes will not be qualified, 
      downgraded or withdrawn as a result of the purchase and cancellation of the Notes by the Issuer    
      following the execution of the documents described in the Extraordinary Resolution.

Modified Dutch Auction Procedure

The Issuer is not committed to accept any tenders of the Notes but will determine a purchase price (the "Purchase Price"), which will not be less than the Minimum Purchase Price nor more than the Maximum Purchase Price, that it will pay to Noteholders whose Offers are accepted pursuant to the Invitation via a modified Dutch auction procedure.

If the principal amount outstanding of the Notes validly tendered exceeds £75,000,000, the Issuer will purchase Notes so tendered and not withdrawn or revoked, at the Purchase Price, in the following order of priority: (i) firstly, Notes tendered on a "non-competitive basis", subject to possible pro-ration; (ii) secondly, Notes tendered at a price below the Purchase Price; and (iii) thirdly, Notes tendered at the Purchase Price subject to possible pro-ration. Holders of Notes whose Offers are accepted by the Issuer will receive the Purchase Price together with accrued interest, even if they made a Non-Competitive Offer or an Offer specifying a price lower than the Purchase Price. Each tender of Notes reduced on a pro rata basis will be rounded down to the nearest £50,000 denomination. No Offer shall be accepted where the acceptance of pro-rated Notes under the Offer would result in a residual amount of Notes of a particular holder totalling less than a £50,000 denomination.

The Offer Price to be specified in an Offer should be in relation to the principal amount outstanding of the Notes and not the nominal value of the Notes.

The Issuer reserves the right, in its sole and absolute discretion, not to accept any Offers, or to modify in any manner any of the terms and conditions of the Invitation  (including, but not limited to, purchasing more than the Maximum Invitation Amount or modifying the Offer Price Range, subject to applicable law) in accordance with the provisions of the Invitation Memorandum.

Cash to be Received for Notes

Noteholders whose offers to tender are accepted by the Issuer, subject to the satisfaction of the Transaction Conditions and any pro-ration, will receive for each £1,000 principal amount outstanding of Notes purchased:

• the Purchase Price; and

• accrued but unpaid interest ("Accrued Interest") for the period from and including the most recent interest payment date for the Notes (i.e. 15 July 2009) up to (but not including) the Settlement Date

Subject to the passing of the Extraordinary Resolution, Noteholders who vote in favour of the Extraordinary Resolution will receive a Consent Payment.

Meeting of Noteholders

In conjunction with the Invitation, a Meeting of Noteholders has been convened to consider and, if thought fit, pass the Extraordinary Resolution which, subject to certain conditions set out therein, would make certain changes to the transaction documents to allow the Issuer to purchase the Notes subject of an Offer. The form of the notice of Noteholders' meeting (he "Notice of Meeting") and the form of the Extraordinary Resolution are set out in the Invitation Memorandum.

Noteholders should refer to both the Invitation Memorandum and the Notice of Meeting for full details of the Invitation and the Extraordinary Resolution to be put to holders.

Participating in the Invitation

To tender Notes pursuant to the Invitation, a Noteholder should deliver, or arrange to have delivered on its behalf, through the relevant Clearing System and in accordance with the requirements of such Clearing System, a valid Electronic Offer Instruction that is received by the Tender Agent by the Expiration Time.

Noteholders are advised to check with any bank, securities broker or other intermediary through which they hold Notes whether such intermediary must receive instructions to participate in the Invitation before the deadlines specified in the timeline below.

A beneficial holder of the Notes should instruct its custodian or other relevant intermediary to deliver a separate Electronic Offer Instruction on its behalf.  This is because if an Electronic Offer Instruction is delivered in relation to more than one beneficial holder (an "Aggregate Tender Instruction"), and there is a pro-ration of tenders, a beneficial holder of Notes whose Notes are accepted for purchase by the Issuer as part of that Aggregate Tender Instruction may, following the purchase of the relevant Notes on the Settlement Date, have a residual holding of less than the minimum denomination of £50,000. Beneficial holders of the Notes should be aware that in such circumstances they will not be able to trade such residual holding in the Clearing Systems.

  Expected Transaction Timeline

Date and time (all times London time)	Event
10 July 2009	Launch Date Commencement of the Invitation and distribution of Invitation Memorandum. Publication of Notice of Meeting through the Clearing Systems and an attendant announcement through the Company Announcements Office of the Irish Stock Exchange via its website (www.ise.ie/app/announcementList.asp).
16 July 2009	A Quarterly Servicing Report will be posted by the Calculation Agent on their website at www.ctslink.com.
31 July 2009 at 10:00 a.m.	Expiration Time Invitation expires unless the Issuer extends it or terminates it earlier in its sole discretion.
	Last date/time to deposit or block Notes in order to obtain a Voting Certificate from the Paying Agent or to instruct the Paying Agent to appoint a proxy to attend the Meeting to vote in favour of or against the Extraordinary Resolution in accordance with the trust deed made between the Issuer and the Note Trustee on 23 March 2005 as supplemented on 29 June 2007 (the "Trust Deed") for those who have not submitted an Electronic Offer Instruction
4 August 2009 at 10:00 a.m.	Meeting of the Noteholders to be held and results of the meeting to be announced as soon as practicable via the Clearing Systems.
6 August 2009 at or around 1:00 p.m.	Price Announcement Date The Issuer announces whether it will accept any Offers, and, if so, the aggregate principal amount outstanding of Notes to be repurchased, the Purchase Price and pro-ration factor, if any, for the Notes.
7 August 2009, or as soon as practicable thereafter	Settlement Date Expected Settlement Date if adjourned Meeting is not required. Subject to the Transaction Conditions being met, the Issuer pays the Purchase Price plus accrued and unpaid interest on the Notes up to but excluding the Settlement Date for any Notes being purchased, and the Consent Payment. If the Extraordinary Resolution is passed, the Issuer will make the Consent Payment to Noteholders who voted in favour of the Extraordinary Resolution even if the Issuer elects not to purchase the Notes. Any adjourned Meeting (if required) will take place no less than 14 days nor more than 42 days after the date of the first Meeting.
22 September 2009	Long Stop Date
	The latest possible Settlement Sate being five Business Days after the latest possible date for the adjourned Meeting to be held.

A copy of the Invitation Memorandum is available to eligible Noteholders upon request from the Tender Agent.

For further information:

A complete description of the terms and conditions of the Invitation is set out in the Invitation Memorandum. Further details about the transaction can be obtained from:

The Dealer Manager:

J.P. Morgan Securities Ltd.

Attn: James Crispin (Syndicate) or Sebastien Bamsey (Liability Management)

Tel: [phone] or [phone]

Email: [e-mail] or [e-mail] 

The Tender Agent:

Lucid Issuer Services Limited

Attn: Lee Pellicci

Tel: [phone]
Email: [e-mail] 

 

END

 

 

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