Swan Housing Capital M&G Security Trustee Announcement (5375C)

TIDM61HI

RNS Number : 5375C

Swan Housing Capital

11 October 2022

Swan Housing Capital plc

11 October 2022

Swan Housing Capital plc

GBP250,000,000 3.625 per cent. Secured Bonds due 2048

(the Bonds)

Terms used but not otherwise defined in this notice shall have the meanings given to them in the Bond Trust Deed constituting the Bonds dated 5 March 2015 between Swan Housing Capital plc (the Issuer) and M&G Trustee Company Limited as Bond Trustee (M&G) (the Bond Trust Deed) and the Original Loan Agreement between the Issuer, Swan Housing Association Limited (the Borrower) and M&G as Security Trustee (the Loan Agreement).

Reference is made to the RNS announcement dated 7 October 2022 (the Issuer RNS) made by the Issuer in relation to:

(a) the failure by the Borrower to deliver to M&G as Security Trustee the consolidated audited financial statements of the Group Parent pursuant to, and in accordance with the time periods required under, the Loan Agreement (the Swan HA Breach); and

(b) the failure by the Issuer to deliver to M&G as Bond Trustee its balance sheet, profit and loss account and report pursuant to, and in accordance with the time periods required under, the Bond Trust Deed (the Issuer Breach and, together with the Swan HA Breach, the Breaches).

Pursuant to:

(i) Clause 14.3 (Breach of Other Obligations) of the Loan Agreement, the Swan HA Breach will constitute a Borrower Default under the Loan Agreement if it continues for the period of 30 days next following the service by the Security Trustee on the Borrower of notice requiring the same to be remedied;

(ii) Condition 12.1(b) (Events of Default), the Issuer Breach will constitute an Event of Default if it continues for the period of 30 days next following the service by the Bond Trustee on the Issuer of notice requiring the same to be remedied; and

(c) Condition 12.2 (Enforcement), the Bond Trustee is not bound to take any steps or action to enforce the provisions of, among other things, the Bond Trust Deed, the Bonds or the Loan Agreement unless it has been so directed by an Extraordinary Resolution or requested in writing by the holders of at least one-fourth in Outstanding Principal Amount of the Bonds then outstanding and it shall have been indemnified, secured and/or pre-funded to its satisfaction.

M&G understands, from the Issuer RNS and its discussions with the Borrower, that:

(A) as a result of the collapse of merger discussions with the Orbit Group, the auditors of the Borrower were unable to complete their audit of the Borrower's financial statements for its financial year ended 31 March 2022;

(B) the Borrower is currently in merger discussions with the Sanctuary Group and is engaging with its auditors to ensure that its auditors complete their audit of the Borrower's financial statements for its financial year ended 31 March 2022 if the Sanctuary merger goes ahead;

(C) subject to satisfactory due diligence and agreement as to terms, the Sanctuary merger is expected to complete by 30 November 2022; and

   (D)       the Borrower and the Issuer will keep M&G appraised of any further developments. 

On the basis of the above, M&G is currently minded not to serve the notices referred to in Clause 14.3 (Breach of Other Obligations) of the Loan Agreement and Condition 12.1(b) (Events of Default) to enable sufficient time for the merger to take effect and the Breaches to be cured unless directed and indemnified, secured and/or pre-funded to its satisfaction in accordance with Condition 12.2 (Enforcement).

M&G and its advisers will continue to monitor developments in respect of the Breaches and the Sanctuary merger and will reassess this position in light of any adverse developments.

M&G reserves all of the rights, powers, claims and remedies available to it under the Transaction Documents and applicable law. No delay or forbearance by M&G to exercise any right or remedy accruing under the terms of the Transaction Documents or other documentation relating thereto, or under applicable law, shall impair any such right or remedy or constitute a waiver thereof or an acquiescence thereto.

Please note that this notice is not intended and should not be construed as investment, accounting, financial, legal, tax, or other advice by or on behalf of M&G, or its directors, officers, affiliates, employees or advisors. Each person or entity receiving this notice should seek the advice of its own advisors in respect of the matters set forth herein.

This notice is given by:

M&G Trustee Company Limited

10 Fenchurch Street

London EC3M 5AG

Telephone: [phone]

Email: [e-mail]

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October 11, 2022 11:04 ET (15:04 GMT)