Following a transformational disposal of its interests in Value Retail (owner of the Bicester Village retail outlet) as part of its turnaround after the considerable impact of COVID-19, and with £1.5bn of debt maturing over the next four years, retail property group Hammerson plc has been following a refinancing strategy in support of its board’s determination to protect the company’s investment grade credit rating and to position the company for the future with a strong balance sheet.
The execution strategy centred around tendering all of Hammerson’s existing sterling bonds and offering a soft allocation policy into a new sterling 12-year issuance. Judging the tender acceptance across the £850.3m of bonds was therefore key to sizing the new issue.
The treasury team developed a model to monitor the financial impact, updated with feedback during the roadshow. This model was then used to size the new issuance and achieve a balanced outcome across multiple goals.
Timing was critical, as access to the markets needed to be post disposal, credit rating upgrades and finalisation of a euro medium-term note (EMTN) programme, but access was desired prior to UK Budget announcements and US elections. Early October was targeted as a quieter window when other issuers were in blackout periods, but to achieve this in such a short timeframe took a huge effort from the treasury team.
The result was an overwhelming response with investors recognising the successful execution of Hammerson’s business strategy and the tenders driving the new issue pricing. Orderbooks peaked above £2.6bn.
The whole process was very much a team effort, led by the treasury team and drawing on the resources and expertise across the company in a close communal atmosphere, to achieve an optimal result. The transaction stood out due to the levels of investor support shown by the 6.5x oversubscription for the new issue and final pricing achieved, with positive feedback from investors on the successful execution of Hammerson’s turnaround by management and confidence in the future growth strategy.
The timing was strategically important and the ratings improvement was critical, as was establishing pricing with material cost reduction and debt maturity extension. It was an efficient and well-executed deal
