A number of different clients had common funding arrangements that were entered into before Welbeck managed their portfolios. The debt was of a long-term nature (c20 years term remaining) and expensive in comparison with current rates. Following an assignment of the loans by the lender, Welbeck took the opportunity to approach the new lender to discuss the potential of an early redemption of the loans. At the same time Welbeck approached a select panel of lenders that it works closely to obtain new loans for the portfolios to finance the redemption. Given the high levels of existing debt (original loans were >90% on cost) Welbeck secured additional mezzanine financing on the portfolios to all but extinguish the shareholders equity requirement. The net effect of this transaction was to achieve a redemption of the original loans at a discount of more than £11million (>12%) on the nominal value of the loans, removal of substantial early redemption penalties that prevented the sale of portfolio assets and a decrease in the weighted average interest rate from over 7% to below 5%.
Welbeck managed the process for the client; negotiating the redemption and the terms of the new debt. In addition Welbeck coordinated the lawyers, tax advisers and valuers involved in the transaction (including tendering for their services, agreeing their scope and fee arrangements) and negotiated and reviewed all the documents involved. Throughout the process Welbeck kept its clients fully updated on the transaction.
