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Published on 5/3/2018 in the Prospect News Liability Management Daily.

Clifden ups tender price for class A notes to get ‘required holding’

By Susanna Moon

Chicago, May 3 – Clifden IOM No.1 Ltd. said it amended its cash tender offer for notes issued by Fairhold Securitisation Ltd. that is set to run until noon ET on May 18.

On May 1, an ad hoc group of Fairhold’s £413.7 million of class A secured floating-rate notes due 2017 and £29.8 million of class B secured floating-rate notes due 2017 said that none of them will take part in the tender offer being run by Clifden.

For the class A notes tendered after May 3, the purchase price was amended to read 54.5, according to a update by Clifden on Thursday.

As of Thursday, holders had tendered £40 million of the class A notes.

Clifden said it will accept the tendered notes for purchase if “a sufficient principal amount of that class of notes is tendered to allow the offeror to establish its required holding of notes,” according to a separate company notice Thursday.

The “required holding” of the class A notes is £104 million, the company said. There is no required holding for the class B notes.

Clifden began tendering for the notes on Feb. 20 and amended the terms on March 21 so that for class A notes tendered after the early deadline, the purchase price was amended to read 1%. Originally, the purchase price was 40% with an early tender premium of 20%.

For the class B floaters, the purchase price will be 1% with an early tender premium of 4%.

There is no change to the purchase price for the class B notes, which remains 1%, the release added.

The early tender deadline also was extended to noon ET on March 28 from March 2.

The offers as most recently amended provide “a purchase price materially greater than the envisaged recovery (if any) from the issuer,” according to the separate company notice Thursday.

The amendments also provide “certainty of execution,” an interim distribution to noteholders of 10% of par and a settlement date of no later than Sept. 28.

Clifden said, “If the issuer is required to pay amounts claimed by the issuer swap counterparties, net distributions to noteholders are likely to be materially less than the purchase price payable under the Offers, and may be nil.”

More details

Clifden said that if it obtains the needed tenders to establish the required holding of class A notes, it would to direct the trustee to serve a note enforcement notice on the issuer and to enforce certain of the security for the notes.

Furthermore, the company is proposing to appoint an administrator of the issuer and a fixed charge receiver over the shares of Fairhold Finance Ltd.

Fairhold Equity Investments Ltd., an affiliate of the offeror, will acquire the shares of FFL from the fixed charge receiver for £1. Fairhold Credit Investments Ltd., also an affiliate of the offeror, will acquire the funding loans, the swaps and any cash at bank from the administrator of the issuer for a cash amount.

After the acquisitions, a “rationalization process” will be held by the offeror, which will involve the transfer of the freehold rights into a newly established subsidiary of FFL.

Afterward, the offeror will effect settlement of the notes accepted for purchase by Sept. 28. Fairhold Credit Investments Ltd. will guarantee settlement. In addition, after the acquisitions, holders of notes accepted for purchase will have direct recourse to Fairhold Finance Ltd. and to the property owners as an additional guarantee of settlement.

Morrow Sodali Ltd. (+44 20 3879 5462 or fairhold@morrowsodali.com) is the tender agent.

Fairhold noteholder group responds

Together, the ad hoc group holds about 60% of the class A notes, more than 75% of the class B notes and 100% of the tranche C notes and I3 note HAS, the group said.

As a result, the ad hoc group now includes funds advised by Angelo, Gordon & Co., LP, by Avenue Europe International Management, LP, by CVC Credit Partners Investment Management Ltd. and by Hayfin Capital Management LLP.

“With the addition of new members to the ad hoc group, the supportive noteholders and the enhanced level of control, the ad hoc group is optimistic that progress can be made,” according to an announcement by the noteholders ad hoc group on Monday.

The ad hoc group and its advisers “are actively pursuing further plans and considering all options including enforcement. As part of these plans, it is anticipated that some or all of the ad hoc group may go private and become restricted from trading at the relevant time in the future,” the release noted.

The ad hoc group also is holding “close and regular dialogue with a number of other sizable class A noteholders who are supportive of the ad hoc group's approach” and together they hold more than 80% of the class A notes, the release added.

For questions, contact glen.cronin@rothschild.com or +44 0 20 7280 5506, richard.tett@freshfields.com or +44 0 20 7832 7627, simon.lalande@rothschild.com or +44 0 20 7280 1589 or christopher.barratt@freshfields.com or +44 0 20 7832 7101.

Fairhold Securitisation is incorporated in the Cayman Islands.


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