LONDON, Aug 20 (Reuters) - McCarthy & Stone announced on Tuesday it has completed the restructuring of 518.9 million pounds ($813.55 million) of debt, reducing the debt burden of the UK retirement home developer by 350 million pounds.
As part of the transaction, a group of 24 institutional investors in the company have injected 367 million pounds into the business and refinanced a further 160 million pounds with a new five-year term loan facility.
A core group of these investors comprising Goldman Sachs, Anchorage, TPG and Alchemy Partners now own over 50 percent of the business.
“The cash injection is basically a rights issue to pay down debt,” said one source close to the negotiations. “A significant amount of McCarthy & Stone’s debt has traded out of the hands of legacy lenders in the last couple of months and left this final group of 24 investors including distressed funds such as Oaktree.”
McCarthy & Stone said the 527 million pounds raised will be used to pay down its outstanding debt, which comprises 510.3 million pounds in loans and an 8.6 million pound swap, as well as any further transaction costs.
McCarthy & Stone CEO Mark Elliott said the loans have been paid nine months ahead of schedule and that the business will now focus on growth plans which include 1.5 billion pounds of investment over the next four years.
In November last year McCarthy & Stone appointed financial advisor Moelis & Company to conduct a strategic review of the business, which has been owned by its lenders following a 2009 debt for equity swap.
According to Thomson Reuters LPC, that deal resulted in 200 million pounds of mezzanine loans being wiped out, leaving around 500 million pounds of senior debt in place. The restructuring was a result of the homebuilder being unable to service its debt after the housing market slump meant fewer elderly people were able to sell their properties to move into care homes.
The business was saddled with unmanageable debt following a 1.1 billion pound take private in 2006 by a consortium led by Halifax Bank of Scotland. ($1 = 0.6378 British pounds) (Editing by Christopher Mangham)