TIDM38LZ
RNS Number : 0526X
Manchester Airport Grp Funding PLC
29 April 2021
MANCHESTER AIRPORT GROUP FUNDING PLC ANNOUNCES A CONSENT
SOLICITATION
29 April 2021
Overview
Manchester Airport Group Funding PLC (the "Issuer") today
announced a consent solicitation in respect of the following series
of bonds (the "Bonds"):
(a) GBP450,000,000 4.75 per cent. Fixed Rate Bonds due 2034 (ISIN: XS1032630771);
(b) GBP360,000,000 4.125 per cent. Fixed Rate Bonds due 2024 (ISIN: XS1057530393);
(c) GBP300,000,000 2.875 per cent. Fixed Rate Bonds due 2039 (ISIN: XS1718393512); and
(d) GBP350,000,000 2.875 per cent. Fixed Rate Bonds due 2044 (ISIN: XS1991245017).
Capitalised terms used in this announcement and not defined
herein have the meanings ascribed to them in the STID Proposal
Information Memorandum dated 29 April 2021 (the "STID Proposal
Information Memorandum").
Background
Following the severe disruption to the global travel industry
caused by the outbreak of the COVID-19 pandemic in March 2020, the
COVID-19 outbreak continues to affect the global travel industry
and cause a significant drop in passenger traffic across each of
the airports owned by the Security Group (the "Group Airports").
MAG faces into this in a strong and prudent financial position.
Ratings action will be fluid during the impact phase of COVID-19.
MAG reiterates its long-standing commitment to targeting BBB+/Baa1
ratings, underpinned by a track record of conservative financial
management.
As part of its strategic response to COVID-19 in 2020, MAG
implemented a robust financial strategy. This included a
combination of cash mitigation measures, together with a
significant GBP300 million of equity support from its Shareholders
(as defined below), to maintain MAG's strong financial health
through the period and to be well positioned for rebound and
recovery.
The Security Group has taken, and continues to take, immediate
actions to mitigate the effects of the drop in passenger numbers by
reducing both capital expenditure and operating costs, as well as
successfully bringing forward the disposal of approximately GBP400
million of non-core investment properties in two tranches and
received in full in October 2020. MAG also continues to have
supportive shareholders who provided a GBP300 million support
package to MAG in 2020.
The Proposer anticipates that EBITDA will be significantly lower
than expected for the Financial Year ending 31 March 2022 as a
result of the continuing impact of the COVID-19 outbreak, with
recovery to pre-COVID-19 passenger levels not expected until 2024.
Given that EBITDA is expected to be at significantly reduced
levels, notwithstanding the mitigating actions taken by MAG, the
disposal of the GBP400m of non-core investment property assets and
the significant shareholder investment in 2020, the nature of the
Interest Coverage Ratio and the Leverage Ratio mean that the
Proposer expects that the Security Group will therefore breach the
Default Ratios in respect of the Interest Coverage Ratio and
Leverage Ratio in the current Financial Year and is seeking the
support of its Secured Creditors by means of a waiver in that
regard. MAG's strategy is to return back within compliance during
the 2023 Financial Year. In addition, MAG is also proposing that
the Default Ratios will be tested on 30 September 2022 by reference
to the EBITDA for the 6 months ended 30 September 2022, annualised
on a seasonal basis, which will be more reflective of prevailing
trading conditions at the time.
Whilst airports in the UK remain operational despite the
reduction in passenger numbers, it should also be noted that there
is a small risk that one or more Group Airports may need to
temporarily close, either as a result of passenger numbers being
reduced to unsustainable levels or due to such closure being
mandated by the UK Government.
Liquidity Position of the Security Group
MAG has maintained strong financial health through the period
and continues to be well positioned for rebound and recovery. The
Security Group successfully brought forward the disposal of
approximately GBP400 million of non-core investment properties in
two tranches, received in full by October 2020. The Security Group
also agreed and received a support package from its shareholders in
aggregate amount of GBP300 million in 2020. The Security Group
Agent has and will continue to use the proceeds of the property
disposal and the shareholder support package for general corporate
purposes.
As a precautionary measure, the Security Group drew
GBP483,999,000 under the GBP500 million revolving credit facility
under the Initial ACF Agreement in full in 2020 and rolled the
revolving credit facility on 29 March 2021. It is intended that
this revolving credit facility will continue to be rolled on a 6
monthly basis.
The STID Proposal
The STID Proposal seeks the consent of the Obligor Security
Trustee to the Requested Consents set out in the STID Proposal
which is appended to the STID Proposal Information Memorandum.
Bondholders are also invited to access an investor presentation
prepared in connection with the STID Proposal by visiting
https://dealroadshow.com/e/MAG2021 and using the requested entry
code
"MAG2021". This investor presentation (including voiceover) is
delivered by the Security Group Agent in satisfaction of its
obligations under paragraph 11 (Update Calls) of Part 1
(Information Covenants) of Schedule 2 (Security Group Covenants) to
the Common Terms Agreement (added pursuant to the Amendment and
Waiver Deed dated 26 June 2020 between, among others, Manchester
Airport Group Investments Limited and Citicorp Trustee Company
Limited).
As more fully set out in the STID Proposal and as described
above, the Security Group Agent is requesting that the Obligor
Security Trustee agrees that (i) the Default Ratios will not be
tested in respect of any Relevant Historic Period ending during the
Waiver Period; and (ii) the Default Ratios will be tested on 30
September 2022 by reference to the EBITDA for the 6 months ended 30
September 2022, annualised on a seasonal basis; and (iii) the
Security Group Agent is not required to confirm in the Compliance
Certificate, for the duration of the Waiver Period, whether the
Distribution Ratios in respect of the Relevant Forward Looking
Period are or are not satisfied.
In addition, the Security Group Agent is requesting pursuant to
the STID Proposal that, for the duration of the Wavier Period, the
Obligor Security Trustee waives any Obligor Event of Default which
may be said to have arisen under:
(i) paragraph 3 (Breach of Other Obligations) of Schedule 3
(Obligor Events of Default) to the CTA as a result of any breach of
the covenant in paragraph 1(c) (Authorisations) of Part 3 (General
Covenants) of Schedule 2 (Security Group Covenants) to the CTA;
(ii) paragraph 4 (Misrepresentation) of Schedule 3 (Obligor
Events of Default) to the CTA as a result of the repetition of the
representation under paragraph 5(b) (Validity) of Schedule 1
(Security Group Representations) to the CTA;
(iii) paragraph 11 (Cessation of business) of Schedule 3
(Obligor Events of Default) to the CTA, only insofar as such
Obligor Event of Default arises as a result of any one or more
temporary suspensions of any such operations or business of an
Obligor;
(iv) paragraph 13 (Regulatory issues) of Schedule 3 (Obligor
Events of Default) to the CTA, only insofar as such Obligor Event
of Default arises as a result of any one or more temporary
suspensions of any Authorisation; or
(v) paragraph 14 (Expropriation) of Schedule 3 (Obligor Events
of Default) to the CTA, only insofar as such Obligor Event of
Default arises as a result of any intervention, restriction or
other action by or on behalf of any government, regulatory or other
authority in relation to any member of the Security Group or any of
its assets,
in each case, as a result of a COVID-19 Event, without any
admission that any such Obligor Event of Default has arisen and
irrespective of whether any event or circumstance resulting in such
Obligor Event of Default arises before or at any time during the
Waiver Period.
The Security Group Agent is additionally requesting pursuant to
the STID Proposal that any time the representation under paragraph
5(b) (Validity) of Schedule 1 (Security Group Representations) to
the CTA is to be made or repeated, it shall not be made or repeated
to the extent it is not accurate as a result of a COVID-19 Event,
without any admission that any such inaccuracy has arisen and
irrespective of whether any such inaccuracy arises before or at any
time during the Waiver Period.
Special Committee of the Investment Association
The STID Proposal set out in the STID Proposal Information
Memorandum has been considered by a special committee of the
Investment Association (the "Special Committee") at the request of
the Issuer. The members of the Special Committee, who hold in
aggregate approximately 44.71 per cent. in Outstanding Principal
Amount of the Bonds have examined the STID Proposal. They have
informed the Issuer that they find the STID Proposal acceptable
and, subject to client and other approvals, they intend to vote in
favour of the STID Proposal in respect of their holdings of
Bonds.
The Special Committee has advised the Issuer that this
recommendation relates only to the STID Proposal set out in the
STID Proposal Information Memorandum and not to any future offers
or proposals which the Issuer may make.
Bank Group of Secured Creditors
The Security Group Agent has undertaken pre-engagement regarding
the STID Proposal with Secured Creditors representing GBP500
million of Qualifying Obligor Senior Debt and comprising 8 banks,
and all banks have indicated that, subject to final approvals, they
intend to vote in favour of the STID Proposal.
Overall Creditor Support
Taking into account the position above in relation to the review
by the Special Committee and the support from the Security Group's
bank lenders, as of the date of the STID Proposal Information
Memorandum, approximately 58.81 per cent. of the aggregate
principal amount of Qualifying Obligor Senior Debt (including the
Bonds) have indicated that subject to client, final and other
approvals, they intend to vote in favour of the STID Proposal.
For detailed information on the STID Proposal see the form of
the STID Proposal (appended at the Schedule to the STID Proposal
Information Memorandum).
Instruction Fees
Subject to the conditions set out in the STID Proposal
Information Memorandum, the approval of the STID Proposal and the
announcement by the Obligor Security Trustee of such approval, the
Issuer will pay to a holder of the Bonds who has delivered a valid
Electronic Voting Instruction in respect of the STID Proposal which
has been received by the Tabulation Agent at or prior to the
Instruction Fee Deadline, which has not been validly withdrawn
following the Instruction Fee Deadline and which remains in full
force and effect until the announcement of the results of the STID
Proposal, the Instruction Fee equal to 0.05 per cent. of the
Principal Amount Outstanding of such Bonds in respect of which the
relevant holder has delivered an Electronic Voting Instruction in
relation to the STID Proposal, in each case received by the
Tabulation Agent at or prior to the Instruction Fee Deadline. The
Instruction Fee will be paid on the Payment Date via the relevant
Clearing System for onward payment to the cash account of an
eligible holder of the Bonds in such Clearing System. The payment
of any such amounts to the relevant Clearing System will discharge
the obligations of the Issuer in respect of the Instruction Fee to
all such relevant Bondholder(s).
Holders of Bonds will not be eligible to receive the Instruction
Fee if they do not submit a valid Electronic Voting Instruction
which has been received by the Tabulation Agent at or prior to the
Instruction Fee Deadline or if they revoke their instructions after
the Instruction Fee Deadline or unblock their Bonds prior to the
Payment Date.
It is a condition to the obligation to pay or procure the
payment of the Instruction Fee to relevant holders of Bonds that
the STID Proposal has been approved and the Obligor Security
Trustee has announced such approval. Such condition(s) are waivable
at the discretion of the Issuer.
Expected Timetable
Event Date
Announcement and delivery of the STID Proposal: 29 April 2021
STID Proposal Information Memorandum to be made
available from the Tabulation Agent (copies
of which are obtainable by Bondholders upon
request, free of charge).
Commencement of Decision Period: (subject to 12 May 2021
no dissenting notice pursuant to Clause 13.4
of the STID having been delivered to the Issuer
in writing within seven Business Days of the
date of receipt of the STID Proposal).
Instruction Fee Deadline: Latest time and date 4.00 p.m. (London
for receipt of Electronic Voting Instructions time) on 21 May
by the Tabulation Agent through the Clearing 2021
Systems for holders to be eligible for payment
of the Instruction Fee.
Expiration Time: Latest time and date for receipt 4.00 p.m. (London
of valid Electronic Voting Instructions by the time) on 2 June
Tabulation Agent through the Clearing Systems 2021
(such Electronic Voting Instructions are irrevocable
from this date).
STID Voting Date: The last day of the Decision 2 June 2021 or
Period (as may be extended in accordance with later, if the Decision
Clause 16.2 of the STID). Period is extended
in accordance with
Clause 16.2 of
the STID.
Announcement by the Obligor Security Trustee 3 June 2021 or
of approval of the STID Proposal: The date on earlier, should
which the notice of consent (as appended to the Obligor Security
the STID Voting Request) announcing the approval Trustee have received
of the STID Proposal executed by the Obligor votes in favour
Security Trustee is delivered to the Security of the STID Proposal
Group Agent pursuant to Clause 14.6 of the STID from Participating
Qualifying Obligor
Secured Creditors
representing at
least 75 per cent.
of the total Outstanding
Principal Amount
of Qualifying Obligor
Senior Debt.
If the STID Proposal is approved and the Obligor
Security Trustee has announced such approval
Execution of Implementation Documents and implementation On the Implementation
of the STID Proposal Date - currently
expected to occur
within 5 Business
Days from the announcement
of approval of
STID Proposal.
The Implementation
Documents shall
take effect from
the Effective Date
(which shall have
the meaning given
to it in the STID
Proposal).
If the conditions to payment of the Instruction
Fee are satisfied
Payment of the Instruction Fee to those Bondholders On the Payment
who are eligible for payment in accordance with Date which is expected
the conditions set out in the STID Proposal to be on or about
Information Memorandum. the fifth Business
Day following the
STID Proposal having
been approved and
the Obligor Security
Trustee having
announced such
approval.
All of the above dates are subject to earlier deadlines that may
be set by the Clearing Systems or any intermediary.
General
Subject to applicable law and as provided herein, the Issuer
may, in its sole discretion, amend the terms of (save for the
Expiration Time), terminate or withdraw the Consent Solicitation at
any time up to the Solicitation Amendment Deadline.
Bondholders are advised to check with the bank, securities
broker, trust company, custodian, Clearing System or other
intermediary through which they hold their Bonds whether such
intermediary will apply different deadlines for participation to
those set out in the STID Proposal Information Memorandum and, if
so, should adhere to such deadlines if such deadlines are prior to
the deadlines set out in the STID Proposal Information
Memorandum.
In relation to the delivery or revocation of Electronic Voting
Instructions, in each case, through the Clearing Systems,
Bondholders holding Bonds in Euroclear or Clearstream, Luxembourg
should note the particular practice of the relevant Clearing
System, including any earlier deadlines set by such Clearing
System.
Only direct accountholders in Euroclear or Clearstream,
Luxembourg may deliver Electronic Voting Instructions. Bondholders
who are not direct accountholders in Euroclear or Clearstream,
Luxembourg should arrange for the accountholder through which they
hold their Bonds to deliver an Electronic Voting Instruction on
their behalf to the relevant Clearing System as more particularly
described in the STID Proposal Information Memorandum. The
deadlines specified by the relevant Clearing System may be earlier
than the Expiration Time.
Bondholders are advised to read carefully the STID Proposal
Information Memorandum for full details of and information on the
procedures for participating in the Consent Solicitation.
A complete description of the terms and conditions of the
Consent Solicitation will be set out in the STID Proposal
Information Memorandum. Bondholders are also invited to access
read-only copies of an investor presentation prepared in connection
with the Consent Solicitation by visiting
https://dealroadshow.com/e/MAG2021 and using the requested entry
code
"MAG2021".
For Further Information:
Further details on the Consent Solicitation and copies of the
STID Proposal Information Memorandum can be obtained from:
The Solicitation Agents
Barclays Bank PLC
5 The North Colonnade
Canary Wharf
London E14 4BB
United Kingdom
Tel: +44 (0)20 3134 8515
Email: eu.lm@barclays.com
Attention: Liability Management Group
NatWest Markets Plc
250 Bishopsgate
London EC2M 4AA
United Kingdom
Telephone: +44 (0) 20 7678 5222
Email: liabilitymanagement@natwestmarkets.com
Attention: Liability Management
The Tabulation Agent
Lucid Issuer Services Limited
Tankerton Works
12, Argyle Walk
London WC1H 8HA
Telephone: +44 20 7704 0880
Email: mag@lucid-is.com
Attention: Arlind Bytyqi
Website: https://deals.lucid-is.com/mag
Disclaimer
This announcement must be read in conjunction with the STID
Proposal Information Memorandum. The STID Proposal Information
Memorandum contains important information which should be read
carefully before any decision is made with respect to the Consent
Solicitation. If any Bondholder is in doubt as to the action it
should take, it is recommended to seek its own financial, legal or
other advice, including as to any tax consequences, from its
stockbroker, bank manager, solicitor, accountant, independent
financial adviser authorised under the Financial Services and
Markets Act 2000 (if in the United Kingdom) or other appropriately
authorised financial adviser. Any individual or company whose Bonds
are held on its behalf by a broker, dealer, bank, custodian, trust
company or other nominee must contact such entity if it wishes to
participate in the Consent Solicitation. This announcement is
issued by Manchester Airport Group Funding PLC. None of the
Solicitation Agents, the Tabulation Agent, the Obligor Security
Trustee or the Bond Trustee accepts any responsibility for the
contents of this announcement.
This announcement is released by Manchester Airport Group
Funding PLC and contains inside information for the purposes of
Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms
part of domestic law by virtue of the European Union (Withdrawal)
Act 2018 ("MAR"), encompassing information relating to the STID
Proposal described above. For the purposes of MAR and Article 2 of
Commission Implementing Regulation (EU) 2016/1055 as it forms part
of domestic law by virtue of the European Union (Withdrawal) Act
2018, this announcement is made by Jenny Cochrane (Secretary) at
Manchester Airport Group Funding PLC.
Legal Entity Identifier number:
Manchester Airport Group Funding PLC - 2138006NA5VAMMBK3892
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END
MSCFIFEDSIIAFIL
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