Wasps Finance gets consents to amend 6½% bonds, waive covenant breach

By Susanna Moon

Chicago, Jan. 19 – Wasps Finance plc said it secured the needed consents to amend its £35 million 6½% secured bonds due May 13, 2022 guaranteed by Wasps Holdings Ltd. and Arena Coventry Ltd.

The meeting was held Friday in London, according to a notice.

As announced Dec. 21, the issuer and guarantors were asking bondholders to approve waivers and amendments to the terms of the bonds.

Bondholders who voted in favor of the measure will receive a consent fee of 0.2% by Jan. 26, the company said.

“We would like to thank our bondholders for supporting these proposals,” Nick Eastwood, chief executive officer of Wasps Holdings, said in the press release.

“A great deal has been done in strengthening Wasps as a commercial business and we strongly believe that these proposals, which better suit the group's operational and cash flow model, are an important part of its future development and success. We are confident in our ability to maintain the momentum from 2017 to continue to grow the business, increase revenues and improve operating profits.”

Wasps was making the consent solicitation as a result of a reduction in consolidated EBITDA for the financial year ended June 30. The reduction to £2.4 million from £3.5 million was identified through an audit by PricewaterhouseCoopers LLP.

The overstatement of consolidated EBITDA was due to accounting irregularities relating to a £1.1 million cash contribution from a shareholder. Specifically, the company and its auditors have concluded that the cash contribution was incorrectly accounted for as income under IFRS.

Due to the timing of receipt of the cash contribution, Wasps’ board of directors and its auditors have also concluded that the cash contribution should be accounted for as a capital contribution made in the year ending June 30, 2018.

Consequently, the guarantors have failed to maintain a ratio of consolidated EBITDA to consolidated finance costs of at least 1.5 to 1.0 as of and for the 12-month period ended on June 30.

The issuer and the guarantors are also seeking to make some changes to the conditions of the bonds as a result of inconsistencies in definitions used in the financial covenants with the group’s operational and cash flow model.

Holders had to deliver voting instructions by 5 a.m. ET on Jan. 17.

Bondinvest Capital Ltd. (m.dyson@bondcap.co.uk, attn.: Michael Dyson, m.smith@bondcap.co.uk, attn.: Michael Smith, +44 14 0378 8456) is the solicitation consultant. Lucid Issuer Services Ltd. (wasps@lucid-is.com, +44 20 7704 0880, attn.: David Shilson) is the tabulation agent.

U.S. Bank Trustees Ltd. is the trustee.

Wasps Finance is a subsidiary of London Wasps Rugby Football Club Ltd.

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