ACT Deals of the Year Awards 2022: Large treasury team winner

The separation and demerger of Haleon from GSK was a multi-faceted transaction that demanded deep involvement from both treasury teams, on both a strategic and operational level.

Leadership

The GSK treasury team was led by Tim Woodthorpe (treasurer) and Jemma Reynolds (Deputy Treasurer and leader of the project team on the GSK side). The Haleon treasury team was led by Mike Rowe (treasurer) and Tom Gilliam (deputy treasurer and leader of the project team on the Haleon side).

The transaction necessitated close coordination and collaboration between the treasury teams at the two entities throughout the process. Physical separation because of the pandemic lockdowns and then operating from different locations, sometimes with new colleagues, presented plenty of additional challenge. The working groups had to be small enough to take decisions and get tasks completed on time, but sufficiently large to bring in internal expertise and knowledge where appropriate. 

The range of tasks involved ran the full gamut of a treasurer’s role and areas of expertise. However, the teams delivered their part in such a complex and large-scale operation without missing a beat in terms of day-to-day treasury operations and funding. 

Tasks and challenges

The many tasks the teams had to achieve, to a strict timetable, included:

• setting up a new bank group for the newco Haleon
• establishing a new $2bn RCF as a principal bank facility for Haleon
• setting up term loans ($1.5bn) and a bridge to DCM for Haleon ($10bn)
• establishing first-time credit ratings for Haleon as a standalone entity – and managing the rating agencies through the demerger process
• devising the best structure for Haleon to issue bonds prior to demerger (so the capital structure would be in place at demerger) – ultimately with a ‘fallaway’ guarantee from GSK
• executing a jumbo multi-currency bond issue for a new name, Haleon
• undertaking interest-rate hedging in advance of the bond issue, to mitigate rate risk
• setting up a Euro Commercial Paper programme to smooth debt management and deleveraging
• recruiting, mainly virtually, the bulk of a new treasury team for Haleon
• implementing the new treasury management system at Haleon alongside new bank account structures.

The challenges included:

• the sheer legal complexity of this exercise and the number of law firms involved
• the timetable (always led by the IPO timetable) and having to put the debt capital structure together first
• explaining the evolution of the deal to the rating agencies
• arranging the bond finance to (as much as possible) match Haleon’s currencies of revenues and earnings – issuing the bonds out of different legal entities to facilitate that
• being a first-time bond market issuer in a deteriorating market 
• achieving a phenomenal result on the bond issue (biggest ever order book for a UK issuer at $42bn) and printing $8.75bn with €2.35bn and £700m deals following in Europe.

What the judges said

“This was a standout entry. There was so much to do, and it was so well done.”

Highly commended

National Grid

Having played an important role in National Grid’s acquisition of Western Power Distribution, the team of more than 30 treasury professionals also helped the successful closure of its $3.8bn sale of its Rhode Island business, and the sale of its UK Gas Transmission business.

A new internal organisational structure following the WPD acquisition involved the integration of the WPD treasury team into the broader National Grid team, which managed multiple complex work-streams over the 12-month period, requiring the team to work together seamlessly across different locations. 2022 also saw the global energy crisis, for which the treasury team conducted a variety of stress case scenarios to ensure adequate financing and liquidity across the National Grid businesses in a downturn scenario. From an ESG perspective the team continued to support the company’s transition to net zero.