Deals of the Year 2016: loans below £750m winner

A revolving credit facility and term loan agreement positioned Phoenix well for its acquisition plans

Winner 2016 loans below £750m: Phoenix

Feb TT DOTY logo

In the Deals of the Year Awards, the judges acclaimed the unique terms of Phoenix’s £650m revolving credit facility (RCF) – in particular the permission to carry out an acquisition without lender consent. That allowed the company to carry out two new acquisitions in 2016, growing its business by 40%.

The goal of the five-person treasury team was to renegotiate Phoenix’s financing arrangements in order to position the group to efficiently fund any acquisition.

Indeed, the deal was negotiated in parallel with and because of Phoenix’s acquisition of AXA UK’s Wealth and Protection business, giving Phoenix an option to use the new RCF to help provide part of the long-term capital structure for the combined group.

Following the company’s improved credit profile, Phoenix approached its banks to renegotiate its core bank financing to reflect its new investment-grade status, as well as increasing flexibility to ensure the group could efficiently fund any acquisition.

 The treasury team built strong relationships with banks to raise financing for their acquisitions efficiently 

The new facility was structured in conjunction with the lead banks to provide enough flexibility to support its growth ambitions, demonstrating the confidence in, and support of, the new management and treasury team.

Refinancing a £450m RCF and a £200m term loan into a four-year £650m RCF, which does not require lender consent for a class 1 acquisition, is an impressive feat for any treasury team, but especially one that had only recently acquired an investment-grade rating (BBB+ senior rating).

The £650m RCF secured 10 lenders, each offering £65m to provide a single £650m tranche maturing in June 2020. The class 1 carve-out allows for any acquisition in line with the publicly stated M&A strategy up to a maximum price of £1.6bn.

The treasury team built strong relationships with banks to raise financing for their acquisitions efficiently. The ability of the team to think holistically for complex financing structures for multiple acquisitions, and plan ahead without dropping responsibility for their daily tasks was thought to be impressive.

Feb 2017 TT Air Liquide Phoenix

What the judges said

“An example of treasury actively contributing to corporate objectives”

Deal highlights

Issuer Phoenix

Amount £650m

Structure Revolving credit facility

Rating (at time of deal) BBB+ (Fitch)

Currency and tenor £/4yr

Interest rate/coupon n/a

Highly commended: Shanks

Shanks Group completed a substantial euro acquisition by a UK group with GBP share capital, carried out either side of the Brexit vote and up against adverse GBP/EUR movements impacting the deal economics.

For that reason the judges highly commended the treasury team for its tenacity and success.

In 2016, Shanks, an international commercial and municipal waste management company, agreed the reverse takeover of its largest and much larger competitor in its core Benelux markets, Van Gansewinkel, for €482m.

A mixture of debt and equity funded the acquisition. This took the form of a term loan, a revolving credit facility (RCF) of €600m, plus consideration shares, a placing and a rights issue.

The €600m fully underwritten multi-currency bank debt facility (€450m RCF and €150m term loan) and acquisition was overwhelmingly supported by shareholders and employees on both sides.

That debt financing has made a significant contribution to the transaction, providing €600m of new facilities and significant headroom for future capex and investment by the combined group.

The group treasurer was able to substantially increase the facility size from €180m RCF to €600m term loan and RCF despite Van Gansewinkel lenders having experienced debt losses in a prior debt restructuring. The company also achieved five-year core maturity with two one-year extension options, including on the term loan tranche, not usually seen in the UK plc market.

The facility secured debt pricing at lower levels than the concurrent and comparable Biffa transaction. And, ultimately, the deal renegotiated the combined group €400m ancillary and bilateral financing arrangements and maintained Shanks’ existing €200m Green Retail Bonds.

About The Treasurer's Deals of the Year Awards

The Treasurer's Deals of the Year Awards recognise the outstanding work of treasurers, both within the treasury community and the wider business world. Through them we champion the success and achievements of treasury teams that have stood out in the market over the prior 12 months. Winning an award is a great way to strengthen your organisation's and your treasury's profile, bringing peer and industry acknowledgement. Find out more here.

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