The award for Loans below £750m went to the specialist care services provider CareTech.
Aiming to deepen its business model and expand its service offering, the company was pursuing the acquisition of children’s services provider Cambian Group Plc – a deal that would result in greater scale, service diversification and geographical coverage, while developing the company’s focus on pathway care for young children through to adults.
To finance the acquisition, CareTech obtained a financing package of £427m, with Lloyds and NatWest acting as joint underwriter and bookrunner mandated lead arrangers.
The package consisted of term debt worth £322m and a £25m RCF, as well as an £80m bridge loan, repayable shortly after completion, to facilitate cash confirmation before utilising Cambian’s significant net cash position. (Source)
Remarkably, the oversubscribed primary subscription resulted in a 100% hit rate of existing and new lenders – despite the transaction taking place at a time of uncertain market conditions
The maturity of the debt was three-and-a-half to five years.
Remarkably, the oversubscribed primary subscription resulted in a 100% hit rate of existing and new lenders – despite the transaction taking place at a time of uncertain market conditions.
The judges spoke highly of the way in which the deal leveraged both new and existing banking relationships, despite the backdrop of considerable political and economic uncertainty.
Moving forward, the expanded bank group is expected to provide CareTech with additional liquidity, as well as a platform to explore further market opportunities in the future.
Following the acquisition, which was completed in October 2018, CareTech’s operation has expanded to include more than 9,000 staff working with around 4,500 service users.
The deal is forecast to provide combined synergies of £6m, with around £3m set to be realised in the financial year ending 30 September 2019 and £5m in the following financial year.
“CareTech’s deal was a good piece of financial work with a 100% hit rate. The feedback in the market was that this was a really well-executed package.”
Provider Lloyds Banking Group, NatWest
Structure £427m debt package including £322m of term debt, an £80m bridge-to-cash facility and a £25m RCF
Also notable in the Loans below £750m category was John Laing Group’s impressive refinancing deal. The infrastructure investor’s goal was to refinance an existing £475m RCF, which was due to mature in March 2020, as well as £50m one-year liquidity facilities.
The group therefore arranged a £650m RCF, consisting of a £500m five-year RCF, with an accordion of up to £100m, and a £150m (+1+1+1) 18-month RCF. The £125m increase in the company’s facility size was designed to support John Laing’s larger portfolio and growing pipeline of transactions.
The deal was particularly noteworthy given the credit difficulties in the wider sector, and was the largest syndicated transaction of a UK infrastructure company following the liquidation of Carillion.
Despite these challenges, John Laing achieved a 20% reduction in margin and secured committed liquidity through to 2023.
Consequently, the company was able to avoid the potential refinancing risks associated with Brexit and position the company for future growth, as well as introducing two new relationship banks.
The judges deemed this to be an interesting and well-executed transaction, completed in a difficult market.
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.
This article was taken from the Deals Edition 2019 issue of The Treasurer magazine. For more great insights, log in to view the full issue or sign up for eAffiliate membership