Narrative
Full Description
Project narrative
On December 16, 2021, a syndicate of eight lenders (but nine financial institutions) — including the London Branch of the Bank of China (BOC) — entered into a £500 million GBP syndicated sustainability-linked revolving credit facility (RCF) agreement with Vistry Group PLC — an England and Wales-incorporated home construction company based in Kings Hill, Kent, England — and Vistry Homes Limited — an England and Wales-incorporated wholly owned subsidiary of Vistry Group — for refinancing and general corporate and working capital purposes. This RCF carried a maturity period of four years with two one-year extension options and a final maturity date of December 15, 2025 and an interest rate based on SONIA plus an initial margin of 1.60%, with the margin shifting between 1.60% and 2.50% based on the Vistry Group's gearing ratio. As a sustainability-linked RCF, this facility featured Key Performance Indicators (KPIs) against which the borrower's performance was assessed, with a margin ratchet of plus or minus 2.5 basis points (bps) depending on whether the borrower met or failed to meet the KPIs. The KPIs were as follows: a year-on-year increase in its delivery of affordable homes, a 4.2% annual reduction of scope 1 and 2 carbon dioxide emissions; and putting 500 new learners through its Partnership Skills Academies. This RCF carried an arrangement fee, an ongoing commitment fee, and an annual agency fee. This RCF was unsecured and was available for drawing in pounds sterling from the signing date to a month prior to the termination date (i.e. November 2025). This RCF could be prepaid without premium or penalty but subject to a limit of no more than four voluntary prepayments in aggregate in any 12-month period. This RCF carried financial covenants included a gearing ratio test, a consolidated tangible net worth test (which, upon the combination-related, and an interest cover test. This RCF was governed by the laws of England and Wales. Vistry Group and Vistry Homes each issued a guarantee for this RCF, as did Vistry Partnerships Limited, Vistry Linden Limited, Linden Limited, and Drew Smith Limited. The proceeds of this RCF were to be used to refinance an existing £600 million GBP RCF and then for general corporate and working capital purposes. The RCF commenced on December 17, 2021. Record ID#101118 captures BOC's contribution. In addition to the London Branch of BOC, the following lenders contributed to the loan syndicate: Barclays Bank PLC, the London Branch of First Commercial Bank Limited, Handelsbanken Capital Markets, Handelsbanken plc, HSBC UK Bank plc, Lloyds Bank PLC, National Westminster Bank plc (NatWest), and Santander UK plc. All these lenders served as mandated lead arrangers and Barclays Bank served as agent. As of October 7, 2022, an amendment and extension process for this RCF was ongoing amidst the proposed cash and share combination of Vistry Group PLC and Countryside Partnerships PLC; Vistry was seeking a maturity period extension of 12 months and other amendments based on the combination. Then, in November 2022, the lending syndicate — still including BOC London Branch — entered into an amendment agreement with Vistry Group and Vistry Homes; in this amendment agreement, the lenders extended the maturity period of the £500 million GBP RCF by one year to December 2026 (for a new maturity period of five years). Record ID#101122 captures BOC's contribution to this debt rescheduling.
Staff comments
1. The individual contributions of the eight lenders to this £500 million GBP syndicated RCF are unknown. Vistry describes the RCF has having eight lenders, even though nine financial institutions are identified; it likely is including Handelsbanken plc and Handelsbanken Capital Markets as one lender, which AidData has applied for purposes of estimating BOC's contribution. For the time being, AidData has estimated BOC's contribution by assuming that each lender contributed equally (£62,500,000 GBP) to the loan syndicate. 2. The average SONIA for December 2021 was 0.1906%. The margin shifted based on the borrower's performance on Key Performance Indicators and its gearing ratio, but at the time of loan issuance it set at 1.60%. Therefore, AidData has coded the interest rate as 0.1906% + 1.60% = 1.7906%. 3. In its 2019 annual report, Vistry Group lists BOC as a principal banker (not present in the 2018 annual report) and mentions that in January 2020 Vistry entered into £600 million GBP of syndicated loan facilities, with eight banks as lenders on — at minimum — the £450 million GBP RCF tranche. In its 2020 annual report, Vistry lists nine principal bankers, including BOC. The December 2021 RCF refinanced the £600 million GBP loan. It is very likely that BOC joined as a lender on the £600 million GBP syndicated loan in 2020. This issue merits further investigation.