Qdecil of the month
Scottish hospital
deal
Dutch joint
housing
What sNewS Issue 10'October 1998 II
Associated British Ports Holdings
Plc (ABP)
|;A structured sub-Libor sale and
leaseback transaction involving assets
valued at GBP 23 million and a lease
maturity of 7.5 years.
n Andrew Richmond (relationship
management, London); Gerard 0'Keefe and
Lynda Carroll (DLL, Dublin); Donnacha Rahii
DLL Treasury, Dublin); Ritesh Shah (DLL,
Watford); Bart Gort (DLL, Eindhoven).
ABP is a holding company for the
largest UK provider of port services,
and has recently been extending its reach
into the US market as well. Privatized in
J983, the company has grown fast, and
lenerated 1997 sales of some GBP 290
million and pre-tax profits of GBP 99
million. Operating out of 23 ports, the
company leads the UK market with its
complete range of port services from
container and roll on/roll off to bulk
commodity handling.
After lengthy discussions that lasted from
mid 1997 through to spring 1998, the
deal, which involved Rabobank and DLL
jointly advancing a GBP 23 million 7.5
year amortizing credit was finalized,
signed and drawn down in August. This
financing replaced certain existing credit
lines. Because of the intensity of the
discussions with our cliënt, the completed
deal substantially raised the level of trust
in our relationship with ABP, for which
we are now a core banking partner. It not
only delivered substantial value to ABP
but attractive fee-income for the
Rabobank group as well as the ongoing
margin. DLL (Ireland) and DLL Financial
Services in Eindhoven both earned a front
end fee for structuring and arranging the
deal, while DLL (Ireland) and DLL (UK)
earned additional income deriving from
the use of its tax capacity.
Irish DLL players left to right:Jan Frederyx,
Lynda Carroll and Gerard O'Keefe
In effect, by making use of tax capacity in
Ireland and the UK, we were able to help
our cliënt, a prestigious name on the UK
corporate market and a leading player in
logistics, realize the cash value of certain
assets which had already been
substantially written down. This cross
border tax arbitrage, developed in close
concert with ABP's legal and fiscal
advisers, made it possible to arrange a
funding deal at extremely advantageous
•ptes. This was the first time that DLL
Jreland) and DLL (UK) were able to use
their own tax capacity, and the deal is an
indication of how far those operations
have progressed in a few years.
In August, Rabobank London, in
conjunction with five other banks,
successfully closed a GBP 225 million deal
to arrange and underwrite senior debt for
the New Royal Infirmary in Edinburgh,
Scotland. The sponsor, the Consort
Healthcare Group, is an established
Rabobank cliënt; we also closed the
group's GBP 82 million hospital project in
Durham (UK) in May. This transaction is
the largest hospital deal closed under the
LIK's Private Finance Initiative (PFI) to
date. It will provide the population of
Edinburgh with an 876 bed hospital and
university medical school equipped to
meet the needs of the coming decade.
Consort will provide operational and
ancillary services over a 30 year
concession, while the National Health
Service (NHS) Trust will provide clinical
services. In addition to providing
structured finance debt, acting as an
arranger gave investment banking the
opportunity to successfully bid for long-
dated interest rate swaps, improving both
our income on this transaction as well as
our profile on that market.
After more than two years'
preparation, a number of Dutch
social housing management corporations,
in association with the treasury
consultants Treasury Adviesgroep
Volkshuisvestiging (TAV), decided last
year to launch an investigation into how
they could jointly fund their activities in a
more inexpensive way on the
international capital markets. The answer
involved creation of a new funding
vehicle called Dutch Housing Association
Finance (DuHAF). With Rabobank help,
DuHAF will be able to launch a new
funding program via the European
Medium Term Note (EMTN) market on
terms more favourable than currently
enjoyed by much larger corporations.
Using this structure, DuHAF
shareholders are also able to tap a much
wider pool of funds on the global
marketplace. In order to attain the lowest
possible funding rate, DuHAF would
Creating new funding vehicle on behalfof
DuHAF, left to right: Arthur Arnotd, Mirelle
Pennings, Colin Fraser, Petra Schuchard, Duco
Wansink and Freek Oosting
benefit from a AAA credit rating.
Attaining this rating should be eased by
the fact that social housing investments
financed by the corporations enjoy
guarantees through the Waarborgfonds
Sociale Woningbouw, an existing
guarantee structure backed by local
government entities in the Netherlands.
Rabobank has enjoyed a long relationship
with ABP, although our role began
primarily as the company's primary non-
UK credit provider. But the sale and
leaseback deal is a
fine example of how
our return on
solvency can be
enhancedthrough
seamless teamwork
among different
entities within the
Rabobank group.
London's Andrew In this case, they
Richmond included relationship
management in
London as well as four different
subsidiaries of De L.age Landen (DLL) in
Ireland, the UK, and the Netherlands.
