Grainger Agrees New Debt Facilities

RNS Number : 5616P

Grainger PLC

05 October 2011

 



5 October 2011

Grainger plc ("Grainger" or the "Group")

GRAINGER AGREES NEW DEBT FACILITIES

WITH EXTENDED MATURITIES AND FURTHER DIVERSIFIED SOURCES

Grainger, the UK's largest quoted residential property owner, today announces the signing of two significant debt financings.  These bring the total amount of debt agreed by the Group during the past eight months to around £1.2bn, providing a strong platform for the Group and resulting in the average life of the Group's committed facilities being extended to 5.9 years.

The two new financings are:

·    a new £840m Forward Start Facility ("FSF"), signed  with five relationship banks.  Of this, £166.5m matures in December 2014, £606m in July 2016, £7.5m in July 2018 and £60m in July 2020; and

·    an innovative new funding structure for certain of the Group's Retirement Solutions assets, non-recourse to the rest of the Group, signed with Partnership Assurance ("Partnership").  The initial drawing will be £50m, and further drawings are envisaged.  The facility is repayable on a property-by-property basis as the assets become vacant and are sold, with interest rolling up on each property. The facility thereby exactly matches the cash flow characteristics of this part of the business, with an expected average maturity of 11 years.

The Group's existing core facilities are £1,093m of which £927m were drawn as at 4 October 2011. The £50m from Partnership will be used to reduce these drawings to an estimated £877m. The £840m FSF plus existing free cash balances exceed the £877m drawn.

The Group continues to be highly cash generative and, in line with its stated strategy, in the past eight months, has agreed £1.2bn of new facilities from a range of sources, comprising £120m upon the acquisition of Grainger GenInvest LLPs, £100m from the M&G UK Companies Financing Fund, £67m on the acquisition of HI Tricomm, as well as the £840m and £50m announced today.

Following this refinancing, Grainger's average cost of debt (based on current LIBOR rates and on current debt hedging of 76%) will be 5.8%.  The average maturity of its facilities is now 5.9 years.

Mark Greenwood, Grainger's Finance Director, commented:

"These transactions give Grainger far greater certainty over its medium and long term financing and are in line with our stated financing strategy.

"We are especially pleased that, as well as the continuing support of Barclays, Lloyds, Nationwide and Royal Bank of Scotland, we are able to welcome HSBC to the syndicate. This follows HSBC and Santander working with us to fund our acquisition of the Grainger GenInvest LLPs earlier this year.

"We are equally pleased to establish the new relationship with Partnership using an innovative funding package tailored to our specialised Retirement Solutions assets. We look forward to working with Partnership to develop this relationship further over time.

"These two new facilities, along with those announced earlier in the year and our proven cash generating capabilities, demonstrate our continued ability to finance the Group and enable it to execute its strategy."

Commenting on Grainger's new relationship with Partnership, Ged Hosty, Managing Director of Equity Release at Partnership said:

"We are delighted with this funding arrangement where we have been able to utilise our expertise in the retirement sector to provide an innovative solution which is a good fit for our balance sheet.  We look forward to working with Grainger on similar transactions in the future."

The Group will publish its trading update as scheduled on 13 October 2011.

For further information:

Grainger plc	FTI Consulting
Mark Greenwood/Kurt Mueller	Stephanie Highett/Dido Laurimore/Will Henderson
Tel: [phone]        [phone]	Tel: [phone]

Note to Editors:

Grainger plc is the largest residential property owner and manager traded on the London Stock Exchange. Its business activities in the UK and Germany cover ownership, trading, fund management, property management and development of residential property. Grainger is also a leading provider of retirement housing solutions, including home reversion products through Bridgewater Equity Release. Grainger owns approximately £2.3bn property assets and has over £3.0bn of property assets under management.

Partnership is a specialist provider of financial solutions for people with health/ lifestyle conditions, as well as those suffering from a serious medical impairment. Partnership Assurance was formed in 2005 following the demutualisation and management buy-out of the Pension Annuity Friendly Society.  Since then, Partnership's business has grown substantially, and it is now recognised as one of the leading providers of retirement and care annuities for people with health conditions.  Beginning with retirement annuities, it then entered the care market, followed closely by protection and then equity release.

 

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