TIDM72YE TIDM19LP
RNS Number : 5324H
Affinity Water Finance (2004) Plc
15 November 2018
15 November 2018
On 23 August 2018 Affinity Water Limited (the "Company", "AWL")
announced that it was considering the substitution of Affinity
Water Programme Finance Limited (the "Current Programme Issuer"),
an entity incorporated in the Cayman Islands, with a special
purpose vehicle incorporated under the laws of England and
Wales.
Further to the above announcement, the Company today announced a
STID Proposal in respect of the following series of bonds issued by
(i) the Current Programme Issuer and guaranteed by the Company,
Affinity Water Holdings Limited and Affinity Water Finance (2004)
PLC (the "Existing Issuer"); and (ii) issued by the Existing Issuer
and guaranteed by the Company, Affinity Water Holdings Limited and
the Current Programme Issuer, (together, the "Bonds"):
ISIN Description Issuer Class Principal
Amount Outstanding
1 XS0883690090 A1 3.625 per Current Programme A GBP14,204,000
cent. Guaranteed Issuer
Bonds due 2022
------------- ------------------ ------------------ ------ --------------------
2 XS1722862080 A5 2.699 per Current Programme A GBP60,000,000
cent. Guaranteed Issuer
Bonds due 2033
------------- ------------------ ------------------ ------ --------------------
3 XS0883686650 A2 4.500 per Current Programme A GBP250,000,000
cent. Guaranteed Issuer
Bonds due 2036
------------- ------------------ ------------------ ------ --------------------
4 XS1480879540 A4 3.278 per Current Programme A GBP85,000,000
cent. Guaranteed Issuer
Bonds due 2042
------------- ------------------ ------------------ ------ --------------------
5 XS1722861439 A6 0.23 per Current Programme A GBP60,000,000
cent. CPI-Linked Issuer
Guaranteed Bonds
due 2042
------------- ------------------ ------------------ ------ --------------------
6 XS0883688516 A3 1.548 per Current Programme A GBP190,000,000
cent. RPI Linked Issuer
Guaranteed Bonds
due 2045
------------- ------------------ ------------------ ------ --------------------
7 XS0195751523 5.875 per cent. Existing Issuer A GBP250,000,000
Guaranteed Notes
due 2026
------------- ------------------ ------------------ ------ --------------------
Capitalised terms used in this announcement and not defined
herein shall have the meanings ascribed to them in the solicitation
memorandum dated 15 November 2018 (the "Solicitation
Memorandum").
BACKGROUND
The Current Programme Issuer was established in 2013 to raise
long-term finance for the Company's investment programme and
operations through the use of a whole business securitisation
structure. At the time of implementing the whole business structure
the Company believed, and continues to believe that the whole
business structure offers many advantages to the Company through
ensuring access to long term capital, best matched to the financing
needs of the Company.
The Current Programme Issuer was incorporated outside the UK to
address two competing pieces of UK legislation: (1) the restriction
banning a private limited company from making offers of securities
to the public (i.e. issuing bonds) and so requiring a public
limited company to be used; and (2) a prohibition on public limited
companies providing "financial assistance" in respect of the
purchase of their own shares ("Financial Assistance").
The rules in respect of Financial Assistance were abolished in
respect of private limited companies by the Companies Act 2006
(which came into force in October 2009). In respect of public
limited companies some rules remain (due to reasons of EU law) but
have been substantively recast so that actions which would have
constituted Financial Assistance under the Companies Act 1985,
would not be so constituted under the Companies Act 2006.
Nonetheless, at the time the whole business securitisation
transaction was implemented there was very limited precedent as to
how such rules would be applied. Therefore, in order to issue bonds
(in part to refinance debt with longer term debt), the Cayman
Islands incorporated Current Programme Issuer (to which the
Companies Act 1985 did not apply) was used as an issuing
subsidiary. It is now clear, however, that if the Company's whole
business securitisation transaction was to be implemented today,
there would be no need to use a Cayman Islands incorporated
company.
Despite being incorporated in the Cayman Islands, the Current
Programme Issuer has always been resident for tax purposes solely
in the UK.
Changes to the rationale for adopting the existing structure
described above, mean that the Company now believes that the time
is opportune to remove the Cayman Islands incorporated Current
Programme Issuer and replace it with an English incorporated SPV
(the "Substitute Programme Issuer" as explained in more detail
below (the "Proposed Substitution"). This will support the
Company's transparency objective, be in the interests of its
customers and wider stakeholders and, the Company believes, be
viewed as a positive step by Ofwat and HM Government.
THE PROPOSED SUBSTITUTION
The following paragraphs summarise the Proposed Substitution,
which is more fully set out in the STID Proposal appended in
Schedule 2 to the Solicitation Memorandum.
The Proposals described in the Solicitation Memorandum have been
considered by a special committee (the "Special Committee") of The
Investment Association at the Company's request.
The members of the Special Committee, who hold in aggregate
approximately 58.1 per cent. of the aggregate principal amount
outstanding of the Class A Bonds issued by the Current Programme
Issuer (at their originally issued nominal amount) and
approximately 36.8 per cent. of the aggregate principal amount
outstanding of the Bonds issued by the Existing Issuer (at their
originally issued nominal amount) have examined the Proposals. They
have informed the Company that they find the Proposals acceptable
and that, subject to client and other approvals, they intend to
vote in favour of the Proposals in respect of their holdings of
Bonds.
The Special Committee has advised the Affinity Water group that
this recommendation relates only to the Proposals set out in the
Solicitation Memorandum and not to any future offers or proposals
which the Company may make.
1. Incorporation of the Substitute Programme Issuer
The Substitute Programme Issuer will be incorporated in England
as a public limited company and at that time is expected to be a
direct wholly owned subsidiary of an affiliate of AWL which is
outside the WBS Transaction ring fence, for administrative reasons.
At the effective date of the Proposed Substitution the Substitute
Programme Issuer will be transferred into the ring-fenced group and
become a direct wholly owned subsidiary of AWL. The constitutional
documents of the Substitute Programme Issuer will be based on those
of the Current Programme Issuer but with a small number of changes
which are necessary because the Substitute Programme Issuer will be
an English public limited company (rather than a company
incorporated in the Cayman Islands). The Current Programme Issuer
is tax resident in the UK and the Substitute Programme Issuer will
also be tax resident in the UK.
2. Transfer of assets
The Current Programme Issuer will transfer all of its assets
(including the benefit of its intra-group loan agreements with AWL)
to the Substitute Programme Issuer.
3. Transfer of liabilities
The Current Programme Issuer will transfer all of its
liabilities (including its obligations to make repayments under the
Transferred Securities) to the Substitute Programme Issuer.
4. Assumption of rights and obligations
The Substitute Programme Issuer will assume all of the Current
Programme Issuer's obligations in respect of the Bonds (whether as
issuer or guarantor).
5. Removal of the Current Programme Issuer
Following the transfer of assets and liabilities from the
Current Programme Issuer to the Substitute Programme Issuer (as
described above), the entire share capital of the Current Programme
Issuer will be transferred by AWL to another company in the
Affinity Water group which is outside of the WBS Transaction ring
fence. The new shareholder will pay to AWL consideration for the
entire share capital of the Current Programme Issuer.
The Current Programme Issuer will then be liquidated (on a
solvent basis).
6. Guarantee and Security
All Guarantors of the Current Programme Issuer's obligations
(including AWL) will confirm that the Guarantees given by them
under the Security Agreement apply to the secured obligations and
liabilities of the Substitute Programme Issuer (as they did to
those of the Current Programme Issuer). The Substitute Programme
Issuer will also replace the Current Programme Issuer as a
Guarantor in relation to the secured obligations and liabilities
guaranteed by the Current Programme Issuer and will accede to the
Security Agreement as a Chargor and provide equivalent security to
that currently granted by the Current Programme Issuer.
7. Amendment Conditions
The Proposed Substitution is not expected to adversely affect
the rights of Bondholders or other secured creditors of the Current
Programme Issuer. The implementation of the Proposed Substitution
is conditional, however on:
(a) Rating Agency confirmations confirming that the Proposed
Substitution will not cause a downgrade or removal of the then
current rating of the Bonds (or where a Rating Agency is not
willing to provide its confirmation due to prevailing policy
regarding the issue of rating affirmations, a certificate in
writing from AWL addressed to the Security Trustee certifying that,
in its opinion (and where the relevant Rating Agency was prepared
to consult with AWL, this opinion is based on consultation with
such Rating Agency), the Proposed Substitution would not cause a
downgrade or removal of the then current rating of the Bonds;
(b) Delivery to the Security Trustee of certain legal opinions as to matters of capacity and enforceability of certain transaction documents;
(c) Voting in favour of the STID Proposal by the majority of the
Class A Debt Instructing Group which will include:
(i) The holders of Class A Bonds voting in accordance with the
procedures set out in Schedule 4, Part B (Provisions for Voting in
respect of STID Direct Voting Matters) of the applicable Bond Trust
Deed; and
(ii) The holders of Existing Issuer Bonds voting in accordance
with the procedures set out in Schedule 5 (Provisions for Voting in
respect of STID Direct Voting Matters) of the applicable Bond Trust
Deed,
in each case, subject to confirmation by the Security Trustee
that the Quorum Requirement for a Voting Matter has been satisfied,
and that the resolution in respect of the Voting Matter set out in
the STID Proposal has been passed by the Majority Creditors
pursuant to clause 8.11 (Requisite majority in respect of a Voting
Matter) of the STID, and
(d) The execution of documentation in respect of the Substitute
Programme Issuer's accession to certain transaction documents and
ancillary amendments required in connection therewith,
in addition to certain other consents, as described in the STID
Proposal.
VOTING PROCEDURES
The voting procedures which are set out at the section entitled
"Procedures in Connection with the Consent Solicitation" of the
Solicitation Memorandum will apply to Bondholder votes in respect
of the STID Proposal, and summarise the detailed information as to
voting procedures which are given in the relevant Bond Trust
Deed.
WORK FEE
Subject to the conditions set out in the Solicitation
Memorandum, including the approval of the STID Proposal and the
announcement by the Company of such approval, the Company will pay,
or procure the payment of, to a holder of the Bonds who has
delivered a valid Electronic Voting Instruction in respect of the
STID Proposal which has been received by the Tabulation Agent at or
prior to the Fee Instruction Deadline, which has not been validly
withdrawn following the Fee Instruction Deadline and/or at or prior
to the Expiration Time, a Work Fee equal to 0.025% of the Principal
Amount Outstanding of such Bonds the subject of the relevant
Electronic Voting Instruction.
The Work Fee will be paid on the relevant Payment Date via the
relevant Clearing System for onward payment to the cash account of
an eligible holder of the Bonds in such Clearing System. The
payment of any such amounts to the relevant Clearing System will
discharge the obligations of the Company in respect of the Work Fee
to all such relevant Bondholder(s).
For the avoidance of doubt, Bondholders of each Issuer who wish
to vote in respect of the STID Proposal and be eligible for the
Work Fee will be required to submit independent instructions in
respect of each series of Bonds in respect of which they wish to
vote.
Bondholders will not be eligible to receive the Work Fee if they
do not submit a valid Electronic Voting Instruction which has been
received by the Tabulation Agent at or prior to the Fee Instruction
Deadline, or if they revoke their instructions after the Fee
Instruction Deadline and/or on or prior to the Expiration Time, or
if they unblock their Bonds prior to the Payment Date.
It is a condition to the Company's obligation to pay or procure
the payment of the Work Fee to relevant Bondholders that: (i) the
STID Proposal has been approved; and (ii) the Bond Trustee and/or
the Security Trustee has announced such approval. Such condition(s)
are waivable at the discretion of the relevant Issuer.
EXPECTED TIMETABLE
Event Date
Announcement of Proposals and delivery of the STID 15 November 2018
Proposal.
----------------------------------------------------------
Solicitation Memorandum and draft Master Implementation 15 November 2018
Deed to be made available at the specified
office of the Tabulation Agent (copies of which are
obtainable by Bondholders upon request,
free of charge).
----------------------------------------------------------
Fee Instruction Deadline: Latest time and date for 4.00 p.m. (London time)
receipt of Electronic Voting Instructions on 30 November 2018
by the Tabulation Agent through the Clearing Systems for
holders to be eligible for payment
of the Work Fee.
----------------------------------------------------------
Expiration Time: Latest time and date for receipt of 4.00 p.m. (London time)
valid Electronic Voting Instructions on 6 December 2018
by the Tabulation Agent through the Clearing Systems
(such Electronic Voting Instructions
are irrevocable from this date).
----------------------------------------------------------
STID Voting Deadline 4.00 p.m. (London time)
on 6 December 2018
----------------------------------------------------------
Announcement of results of STID Proposal 7 December 2018 or earlier, subject to the STID Proposal,
should the Security Trustee have
received votes in favour of the Proposals from Class A
DIG Representatives representing more
than 50% of the aggregate Outstanding Principal Amount of
all relevant Qualifying Secured
Debt.
----------------------------------------------------------
If the STID Proposal is approved and the Company has
announced such approval
----------------------------------------------------------
Payment of the Work Fee to those holders who are eligible On the Payment Date which is expected to be on or about
for payment in accordance with the the fifth Business Day following the
conditions stipulated in the Solicitation Memorandum. announcement of the results of STID Proposal.
----------------------------------------------------------
Execution of the Master Implementation Deed On the Amendment Date - to occur as soon as reasonably
practicable after the STID Voting Deadline.
The amendments under the Master Implementation Deed will
become effective on the Substitution
Effective Date, currently expected to occur within six
months of the STID Voting Deadline,
subject to satisfaction (or waiver by the Security
Trustee) of each Amendment Condition.
----------------------------------------------------------
All of the above dates are subject to earlier deadlines that may
be set by the Clearing Systems or any intermediary.
GENERAL
Subject to applicable law and as provided in the Solicitation
Memorandum, the relevant Issuer may, in its sole discretion, amend
the terms of (save for the Expiration Time), terminate or withdraw
the Consent Solicitation at any time up to the Solicitation
Amendment Deadline.
Bondholders are advised to check with the bank, securities
broker, trust company, custodian, Clearing System or other
intermediary through which they hold their Bonds whether such
intermediary will apply different deadlines for participation to
those set out in the Solicitation Memorandum and, if so, should
adhere to such deadlines if such deadlines are prior to the
deadlines set out in the Solicitation Memorandum.
In relation to the delivery or revocation of Electronic Voting
Instructions, in each case, through the Clearing Systems,
Bondholders holding Bonds in Euroclear or Clearstream, Luxembourg
should note the particular practice of the relevant Clearing
System, including any earlier deadlines set by such Clearing
System.
Only direct accountholders in Euroclear or Clearstream,
Luxembourg may deliver Electronic Voting Instructions. Bondholders
who are not direct accountholders in Euroclear or Clearstream,
Luxembourg should arrange for the accountholder through which they
hold their Bonds to deliver an Electronic Voting Instruction on
their behalf to the relevant Clearing System as more particularly
described in the Solicitation Memorandum. The deadlines specified
by the relevant Clearing System may be earlier than the Fee
Instruction Deadline and/or the Expiration Time.
Bondholders are advised to read carefully the Solicitation
Memorandum for full details of and information on the procedures
for participating in the Consent Solicitation.
A complete description of the terms and conditions of the
Consent Solicitation will be set out in the Solicitation
Memorandum.
For Further Information:
Questions relating to the Consent Solicitation can be directed
to the Solicitation Agent or the Company:
Solicitation Agent:
Lloyds Bank Corporate Markets plc
10 Gresham Street
London EC2V 7AE
United Kingdom
Telephone: +44 (0) 20 7158 1719/1726
Email: liability.management@lloydsbanking.com
Attention: Liability Management Team, Commercial Banking
The Company:
Affinity Water Limited
Tamblin Way
Hatfield
Hertfordshire
AL10 9EZ
Telephone: +44 1707 679 340
Email: nilesh.patel@affinitywater.co.uk
Attention: Nilesh Patel, Treasurer
Copies of the Solicitation Memorandum can be obtained from the
Tabulation Agent:
Citibank, N.A., London Branch
Citigroup Centre
Canada Square
London E14 5LB
United Kingdom
Telephone: +44 20 7508 3867
Fax: +44 20 3320 2405
Email: citiexchanges@citi.com
Attention: Exchange Team
Copies of the STID Proposal (excluding any annexes thereto) will
be made available on the website of the Company.
DISCLAIMER
This announcement must be read in conjunction with the
Solicitation Memorandum. The Solicitation Memorandum contains
important information which should be read carefully before any
decision is made with respect to the Consent Solicitation. If any
Bondholder is in doubt as to the action it should take, it is
recommended to seek its own financial advice, including as to any
tax consequences, from its stockbroker, bank manager, solicitor,
accountant, independent financial adviser authorised under the
Financial Services and Markets Act 2000 (if in the United Kingdom)
or other appropriately authorised financial adviser. Any individual
or company whose Bonds are held on its behalf by a broker, dealer,
bank, custodian, trust company or other nominee must contact such
entity if it wishes to participate in the Consent Solicitation.
This announcement is issued by Affinity Water Limited. None of the
Solicitation Agent, the Bond Trustee or the Existing Bond Trustee
accepts any responsibility for the contents of this
announcement.
This announcement is released by Affinity Water Limited and
contains inside information for the purposes of Article 7 of the
Market Abuse Regulation (EU) 596/2014 ("MAR"), encompassing
information relating to the Proposed Substitution described above.
For the purposes of MAR and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this announcement is made by Tim Monod
at Affinity Water Limited.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCUVVVRWKAAAAA
(END) Dow Jones Newswires
November 15, 2018 11:03 ET (16:03 GMT)
Grafico Azioni Affinity 5 7/8% (LSE:72YE)
Storico
Da Gen 2025 a Feb 2025
Grafico Azioni Affinity 5 7/8% (LSE:72YE)
Storico
Da Feb 2024 a Feb 2025
