TIDM48VL
RNS Number : 8939E
Marston's Issuer PLC
11 November 2020
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO, OR TO
ANY PERSON LOCATED OR RESIDENT IN, ANY JURISDICTION WHERE IT IS
UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS DOCUMENT. NOTHING
IN THIS ANNOUNCEMENT CONSTITUTES OR CONTEMPLATES AN OFFER OF, AN
OFFER TO PURCHASE OR THE SOLICITATION OF AN OFFER TO SELL
SECURITIES IN THE UNITED STATES OR ANY OTHER JURISDICTION.
MARSTON'S ISSUER PLC ANNOUNCES COVID-19 CONSENT SOLICITATION
11 November 2020
Overview
Marston's Issuer PLC (the "Issuer") today announces a consent
solicitation (the "Consent Solicitation") in respect of the
GBP214,000,000 Class A2 Secured Fixed/Floating Rate Notes due 2027
(XS0226790748) (the "Class A2 Notes"), the GBP200,000,000 Class A3
Secured Fixed/Floating Rate Notes due 2032 (XS0226792280) (the
"Class A3 Notes") and the GBP250,000,000 Class A4 Secured Floating
Rate Notes due 2031 (XS0331071026) (the "Class A4 Notes", and
together with the Class A2 Notes and the Class A3 Notes, the
"Notes").
The Consent Solicitation is being launched in order to seek the
approval of the holders of the Notes (the "Noteholders") (by way of
Extraordinary Resolution at a single meeting of the Noteholders) to
further waivers and a further amendment in respect of certain
provisions in the financing to which the Issuer is a party, as
described further below. Equivalent waivers and amendment were
approved by Noteholders in May 2020 in connection with the first
"lockdown". The need for these further waivers and amendment has
arisen directly as a result of the second forced closure of pubs,
restaurants and other hospitality venues in England for the period
from 5 November 2020 until at least 2 December 2020 (the "Second
Lockdown") by order of the UK Government as a result of the
COVID-19 pandemic.
Capitalised terms used in this announcement (the "Announcement")
and not defined herein shall have the meanings ascribed to them in
the Consent Solicitation Memorandum dated 11 November 2020 (the
"Solicitation Memorandum").
Rationale and Background to the Proposals
As Noteholders are aware, on 29 May 2020 the overwhelming
majority of holders of the Notes approved an Extraordinary
Resolution to implement, among other things, waivers and amendments
to the Debt Service Covenant (and accompanying Loan Events of
Default) in respect of the Financial Quarter Dates falling on 27
June 2020, 3 October 2020 and 2 January 2021. This was in response
to the adverse impact on the performance of Marston's Pubs Limited
(the "Borrower") and its parent, Marston's Pubs Parent Limited
(together with the Borrower, the "Security Group"), of enforcement
measures taken by the UK Government to shut down completely the
operations of pubs and restaurants across the United Kingdom from
20 March to 4 July 2020 as a result of the COVID-19 pandemic.
As explained at the time, the waivers and amendments which were
approved in May 2020 were considered by the Security Group to be
the minimum amendments and waivers required to support the
Transaction at that time, based on the assumption that pubs and
restaurants would be forced to remain closed during some of the
summer period but gradually reopen across the United Kingdom with
social distancing measures in place. In particular, the waiver and
amendment of the Debt Service Covenant were not sufficient to take
account of a further "lockdown" in England to the extent of the
Second Lockdown.
Noteholders will now be aware that, following a second set of
strict "lockdowns" and enforced closures of non-essential retail
and hospitality businesses imposed by the UK Government and
devolved administrations, the wider Marston's group (the "Group")
once again closed all of its pubs in Wales for a two week period
prior to 9 November 2020 and in England for the period of the
Second Lockdown, including those pubs in the Secured Estate.
Against this backdrop, the Security Group considers it prudent
at this time to request (a) further waivers of the Debt Service
Covenant (and related Loan Events of Default) for the Financial
Quarter Dates falling in January and April 2021, and (b) an
equivalent amendment as was approved at the meeting of Noteholders
in May 2020 to the regime regulating disposals of mortgaged
properties in order to ensure that the Security Group can manage
the Portfolio effectively through to the end of the financial year
ending on 1 October 2022 (together, the "Proposals"). The Proposals
are based on a number of assumptions including that: (a) the vast
majority of the pubs in the Secured Estate will be able to reopen
and trade from the beginning of December (albeit subject to
continued operational restrictions and social distancing measures);
(b) the pubs in the Secured Estate will be fully open for the
duration of the final two financial quarters of the financial year
ending on 2 October 2021 (albeit subject to continued operational
restrictions and social distancing measures); and (c) the
performance of the pubs will remain robust (when permitted to be
open) in spite of the UK Government's and devolved administrations'
restrictions.
In summary, the waivers will support the Transaction through the
impact of the Second Lockdown, the expected continuation of the
tiered and other restrictions across the United Kingdom thereafter
and possible further short "lockdowns" in England and Wales during
the spring of 2021. Furthermore, the amendment will enable the
Security Group to manage the Portfolio effectively through to the
end of the financial year ending on 1 October 2022. The Issuer and
the Borrower consider that the proposed waivers and amendment are
prudent to avoid any potential default, to preserve the value of
the Security Group, and to allow the Security Group the flexibility
it requires over the coming months in the face of the continued
uncertain approaches of the UK Government and devolved
administrations to pub closures and operating restrictions.
The Issuer draws Noteholders' attention to the following key
points (each of which is described in further detail in
Solicitation Memorandum):
(i) Security Group's strong performance in the face of COVID-19:
As mentioned above, after the first "lockdown" measures imposed by
the UK Government were eased in July this year, the Group was able
to successfully reopen approximately 99 per cent. of its pubs
(including the 948 pubs in the Secured Estate, 870 of which are in
England, with the balance in Wales) but under continued
restrictions as was anticipated, including social distancing.
Despite these restrictions, like-for-like sales at the Group's
managed and franchised pubs reached an average of 90 per cent. of
the previous financial year during the 13-week period ending on 3
October 2020; during August, like-for-like sales increased by 6 per
cent. in comparison to August 2019. The Group's pubs also saw an
outperformance relative to the UK pub sector of approximately 7 per
cent. (according to the CGA Peach Tracker). Notably for the
Security Group the Debt Service Covenant ratios for the most recent
Relevant Period and Relevant Year ending on 3 October 2020 were
1.01:1 and 1.09:1 respectively, based on the unaudited financial
statements for the year ending 3 October 2020.
These results underline the Group's ability to manage and reopen
its pubs (including the pubs in the Secured Estate) successfully in
spite of the continued restrictions imposed on the hospitality
sector by the UK Government and devolved administrations; they also
illustrate the resilience of the Group's pubs and its business
model more broadly when pubs and restaurants are allowed to open
and trade.
Other than the Proposals, the Security Group can confirm that
the other amendments and waivers approved by Noteholders in May
2020 continue to support the Transaction effectively and, based on
various assumptions including those outlined above, it does not
anticipate requiring extensions or changes to those other
amendments and waivers at this time or needing to obtain further
waivers or amendments from the Noteholders.
(ii) Sufficient liquidity ensures no loss to Noteholders: As
Noteholders are aware, the Security Group utilised part of its
Liquidity Facility as a direct result of the "lockdown" measures
imposed in March 2020. At the time of the Noteholder meeting in May
2020, it had expected to borrow in the region of GBP18 million on
15 July 2020 to meet its quarterly debt service payment obligations
on that date in full. However, cash generation was stronger than
anticipated after the pubs in the Secured Estate were allowed to
reopen in early July 2020, with the result that the Security Group
only drew down GBP15 million under the Liquidity Facility. GBP5
million of this was repaid ahead of expectations on 15 October
2020, illustrating the Security Group's ability to generate strong
cash flows even with restricted opening and suppressed trading
conditions.
The Security Group currently expects the Issuer to be able to
meet in full its quarterly debt service payment obligations under
the Notes on 15 January 2021 and 15 April 2021 without having to
increase borrowings under the Liquidity Facility, assuming the vast
majority of the pubs in the Secured Estate will be able to reopen
and trade from the beginning of December (albeit subject to
continued operational restrictions and social distancing measures).
The Security Group also expects to be able to repay the remaining
GBP10 million borrowing under the Liquidity Facility in full on or
before 15 October 2021, as previously indicated. Both these
expectations depend, however, on the course of the COVID-19
pandemic and the UK Government's and devolved administrations'
response to it over time. In any event, there remains GBP110
million of headroom under the Liquidity Facility.
Furthermore, as a result of the Second Lockdown, the Security
Group anticipates that the Debt Service Covenant could be breached
on the forthcoming Financial Quarter Dates falling on 2 January
2021 and 3 April 2021. Based on the current intentions expressed by
the UK Government that pubs and restaurants in England will be
forced to remain closed until 2 December 2020, and based on the
assumption that once they are allowed to reopen and can operate
from the beginning of December (albeit that there will continue to
be tiered and other restrictions imposed which will affect the
operation of pubs and restaurants across the United Kingdom), the
Security Group anticipates that:
(a) its two Financial Quarter Debt Service covenant for the
Relevant Periods ending on 2 January 2021 and 3 April 2021 will
drop to around 1.27:1.00 and 1.01:1.00 respectively, and then
return to above the required covenant level of 1.10:1.00 for the
Relevant Period ending on 3 July 2021 and thereafter; and
(b) its four Financial Quarter Debt Service covenant for the
Relevant Years ending on 2 January 2021 and 3 April 2021 will drop
to around 0.95:1.00 and 1.01:1.00 respectively, and then return to
above the required covenant level of 1.10:1.00 for the Relevant
Year ending on 3 July 2021 and thereafter.
However, it is impossible to predict the impact of any further
"lockdown" measures that might be imposed by the UK Government and
devolved administrations throughout the winter period. There is no
certainty that the Second Lockdown in England will come to an end
on 2 December 2020 or that other measures will not be imposed which
materially impact the Security Group's ability to trade. Therefore,
as a precautionary measure the Security Group is requesting waivers
of any breaches of the Financial Quarter Debt Service covenant (and
the corresponding Loan Event of Default) arising on the Financial
Quarter Dates falling on 2 January 2021 and 3 April 2021, in
respect of both the most recent Relevant Periods and the most
recent Relevant Years ending on such Financial Quarter Dates.
(iii) Mitigation actions: The Security Group continues to take
steps to mitigate the impact of the restrictions imposed by the UK
Government and devolved administrations. These measures include
furloughing staff, use of the Job Retention Scheme, and minimising
underlying operating and capital expenditure and central costs.
Overall, the Security Group believes that it is continuing to take
a very prudent approach in managing the business during this period
of unprecedented uncertainty and is keeping the situation under
continuous review.
If the Proposals are not approved, technical Loan Events of
Default will occur. While the potential implications of a Loan
Event of Default cannot be predicted with certainty, any default is
likely to have a material negative impact for all stakeholders in
the transaction over and above the impact of the Second Lockdown,
given (i) the risk of significant ongoing disruption to the
business of the Security Group, both during the period for which
the Second Lockdown applies and the period after pubs and
restaurants are allowed to reopen for which tiered and other
restrictions will continue to apply across the United Kingdom, and
the likely negative impact on the ability of the Security Group to
maintain its value throughout such periods, and (ii) the potential
administrative receivership costs. These factors would also be
expected to have a negative impact on leverage and cash flows
within the Security Group.
Proposals
For the reasons set out above, the Issuer is calling a meeting
of Noteholders in order to seek the consent of Noteholders to
implement the Proposals, the terms of which are set out in the
Solicitation Memorandum. The Proposals require the approval of the
Class A Noteholders and, if the Proposals are approved at the
meeting, such approval will bind all Class A Noteholders and also
the Class B Noteholders. The Proposals will be implemented by entry
into of the Deed of Amendment and Waiver.
Meeting of Noteholders
A single meeting of holders of the Notes to consider, and if
thought fit, pass the Extraordinary Resolution to approve the
Proposals shall take place at 10.00 a.m. (London time) on 3
December 2020 in respect of the Notes. Noteholders are directed to
the Notice of Meeting and the Solicitation Memorandum (information
relating to which has been sent today to all Noteholders via the
Clearing Systems) which contains the full terms of the Proposals
and details of the Meeting.
In light of the ongoing COVID-19 pandemic, it is expected that
it will be impossible or inadvisable to hold a physical Meeting. As
a result, the Issuer and the Note Trustee will prescribe further or
alternative regulations regarding the holding of the Meeting by
audio or video conference call, and those Noteholders who have
indicated that they wish to attend the Meeting will be provided
with further details about attending the audio or video conference
call.
Noteholders who do not wish to attend the Meeting but who wish
to vote must take action on or prior to 10.00 a.m. (London time) on
1 December 2020 (the "Expiration Time"), subject to amendment,
extension or termination by the Issuer and any earlier deadlines
set by any intermediary through which such Noteholders hold their
Notes.
Implementation
The implementation of the Proposals and the Extraordinary
Resolution will be conditional on the passing of the Extraordinary
Resolution and the execution of the Deed of Amendment and Waiver.
The Deed of Amendment and Waiver will take effect from the date
that such Deed of Amendment and Waiver is entered into or, if
later, the date on which it becomes effective in accordance with
its terms, and will (i) document the waivers requested and (ii)
effect the amendments to the Issuer/Borrower Facility Agreement,
which will together reflect the Proposals. Further detail on the
Proposals is set out in the Solicitation Memorandum.
Early Instruction Fee
Subject to the conditions set out in the Solicitation Memorandum
and the approval of the Extraordinary Resolution, the Issuer will
pay or procure to be paid on the Payment Date to each Eligible
Noteholder that has delivered a valid Electronic Voting Instruction
in favour of or against the Extraordinary Resolution which has been
received by the Information and Tabulation Agent at or prior to the
Early Instruction Deadline, which has not been validly withdrawn at
or prior to the Expiration Time and which remains in full force and
effect until the conclusion of the Meeting, the Early Instruction
Fee equal to 0.05 per cent. of the Principal Amount Outstanding of
the Notes that are the subject of the relevant Electronic Voting
Instruction. Any Early Instruction Fee shall be paid on the Payment
Date via the relevant Clearing System for payment to the cash
account of the relevant Direct Participant in such Clearing System
for onward payment to the relevant Beneficial Owner (if
applicable).
Eligible Noteholders will not be eligible to receive the Early
Instruction Fee for Electronic Voting Instructions submitted after
the Early Instruction Deadline or for Electronic Voting
Instructions that do not vote in favour of or against the
Extraordinary Resolution or if they seek to vote in respect of the
Extraordinary Resolution in any other manner, whether or not they
vote in favour of or against the Extraordinary Resolution.
Only Eligible Noteholders may deliver a valid Electronic Voting
Instruction and, therefore, only Eligible Noteholders may receive
the Early Instruction Fee.
Expected Timetable Event Date
Announcement of the Consent Solicitation 11 November 2020
and the Proposals via the RNS. Notice
of Meeting given to Noteholders through
the Clearing Systems.
Solicitation Memorandum and draft of the 11 November 2020
form of the Deed of Amendment and Waiver
to be made available by the Information
and Tabulation Agent (copies of which
are obtainable by Noteholders upon request,
free of charge).
Early Instruction Deadline : Latest time 4.00 p.m. (London
and date for receipt of Electronic Voting time)
Instructions through the Clearing Systems on 27 November
to be received by the Information and 2020
Tabulation Agent for eligibility for payment
of the Early Instruction Fee. Such Electronic
Voting Instructions must be in favour
of or against the Extraordinary Resolution
in order for the relevant Noteholder to
be eligible for the Early Instruction
Fee.
Expiration Time : Latest time and date 10.00 a.m. (London
for (i) receipt by the Information and time)
Tabulation Agent of valid Electronic Voting on 1 December 2020
Instructions through the Clearing Systems
(such Electronic Voting Instructions are
irrevocable from this date) and (ii) obtaining
a voting certificate from the Principal
Paying Agent and for the issuance or withdrawal
of a voting instruction whether given
by way of an Electronic Voting Instruction
or otherwise.
Time and date of the Meeting in respect Commencing at 10.00
of the Notes. a.m. (London time)
on 3 December 2020
as set out in the
Notice of Meeting
Announcement of result of the Meeting As soon as reasonably
via the RNS. Notice of result of the Meeting practicable after
to be given to Noteholders through the the Meeting
Clearing Systems.
If the Extraordinary Resolution is passed As soon as reasonably
at the Meeting, execution of the Deed practicable after
of Amendment and Waiver. the Meeting
If the Consent Conditions are satisfied, Expected to be
payment of any Early Instruction Fee to on or about 10
relevant Eligible Noteholders (the "Payment December 2020,
Date"). being the date
falling 5 Business
Days after the
date of the quorate
Meeting
Noteholders or Beneficial Owners are advised to check with the
bank, securities broker, Clearing System or other intermediary
through which they hold their Notes whether such intermediary
applies different deadlines for the receipt of Electronic Voting
Instructions or (in the limited circumstances in which withdrawal
is permitted) to the withdrawal of Electronic Voting Instructions
to vote in respect of the Proposals, and then to adhere to such
deadlines if such deadlines are prior to the deadlines set out
above.
All of the above deadlines for the submission and (where
permitted) revocation of Electronic Voting Instructions are subject
to earlier deadlines that may be set by the Clearing Systems or any
intermediary.
General
The Issuer may, at its option and in its sole discretion, amend,
terminate or waive any of the terms and conditions relating to the
Consent Solicitation at any time (subject in each case to
applicable law and the Noteholder Meeting Provisions and as
provided in the Solicitation Memorandum, and provided that no
amendment may be made to the Extraordinary Resolution or the
Expiration Time).
In relation to the delivery or withdrawal of Electronic Voting
Instructions, in each case, through the Clearing Systems,
Noteholders holding Notes in Euroclear or Clearstream, Luxembourg
should note the particular practice of the relevant Clearing
System, including any earlier deadlines set by such Clearing System
or any intermediary.
Only Noteholders who are shown on the records of a Clearing
System as a holder of the Notes (each a "Direct Participant") may
deliver Electronic Voting Instructions. Noteholders who are not
Direct Participants in Euroclear or Clearstream, Luxembourg should
arrange for the Direct Participants through whom they hold their
Notes to deliver an Electronic Voting Instruction on their behalf
to the relevant Clearing System as more particularly described
under "Procedures in connection with the Consent Solicitation -
Procedure for Delivering Electronic Voting Instructions" in the
Solicitation Memorandum.
Noteholders are advised to read carefully the Solicitation
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 is set out in the Solicitation Memorandum.
For Further Information:
Further details on the Consent Solicitation and copies of the
Solicitation Memorandum can be obtained from:
The Information and Tabulation Agent
D.F. King Ltd.
65 Gresham Street
London EC2V 7NQ
United Kingdom
Tel: +44 (0) 20 7920 9700
Email: marstons@dfkingltd.com
Website: https://sites.dfkingltd.com/marstons
Further details relating to the contents of this Announcement
can be obtained from:
Marston's Pubs Parent Limited
Marston's House
Brewery Road
Wolverhampton WV1 4JT
United Kingdom
Attention: Rob Leach
Solicitation Restrictions
This Announcement does not constitute an invitation to
participate in the Consent Solicitation in any jurisdiction in
which, or to any person to whom, it is unlawful to make such
invitation or for there to be such participation under applicable
securities laws. The distribution of this Announcement in certain
jurisdictions may be restricted by law.
Persons into whose possession this Announcement comes are
required by each of the Issuer, the Borrower, the Group, the
Information and Tabulation Agent, the Trustee and the Principal
Paying Agent to inform themselves about, and to observe, any such
restrictions.
United States
This Announcement is not an offer of securities for sale in the
United States or to, or for the account or benefit of, any U.S.
person. Securities may not be offered or sold in the United States
absent registration or an exemption from registration. The Notes
have not been and will not be registered under the Securities Act,
or the laws of any state or other jurisdiction of the United
States, and may not be offered or sold in the United States or to,
or for the account or benefit of, U.S. persons, unless an exemption
from the registration requirements of the Securities Act is
available.
General
Nothing in this Announcement constitutes or contemplates an
offer of, an offer to purchase or the solicitation of an offer to
sell any security in any jurisdiction and participation in the
Consent Solicitation by a Noteholder in any circumstances in which
such participation is unlawful will not be accepted.
Each Noteholder participating in the Consent Solicitation will
be required to represent that it is an Eligible Noteholder as set
out in "Procedures in connection with the Consent Solicitation" in
the Solicitation Memorandum. Each of the Issuer and the Information
and Tabulation Agent reserves the right, in its absolute
discretion, to investigate, in relation to any submission of
Electronic Voting Instructions, whether any such representation
given by a Noteholder is correct and, if such investigation is
undertaken and as a result the Issuer determines (for any reason)
that such representation is not correct, such Electronic Voting
Instruction may be rejected.
Disclaimer
This Announcement must be read in conjunction with the
Solicitation Memorandum. The Solicitation Memorandum contains
important information which should be read carefully before any
decision is made with respect to the Consent Solicitation and the
Proposals. If any Noteholder is in any doubt as to the action it
should take, it is recommended to seek its own financial, legal and
investment 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 (the "FSMA") (if in the United Kingdom) or other
appropriately authorised independent professional adviser. Any
individual or company whose Notes 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 or otherwise vote in respect of the Proposals. None of
the Issuer, the Borrower, the Information and Tabulation Agent, the
Principal Paying Agent and the Trustee or any of their respective
affiliates, directors, employees, officers, agents, consultants or
representatives makes any representation or recommendation as to
whether or not or how Noteholders should participate in the Consent
Solicitation or vote in respect of the Proposals.
None of the the Information and Tabulation Agent, the Principal
Paying Agent or the Trustee accepts any responsibility for the
contents of this Announcement. For the purposes of the Market Abuse
Regulation (EU) 596/2014 and Article 2 of Commission Implementing
Regulation (EU) 2016/1055, this Announcement is made by Daniel
Wynne, Director of Marston's Issuer PLC.
This information is provided by RNS, the news service of the
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END
MSCEAKFEFSSEFFA
(END) Dow Jones Newswires
November 11, 2020 03:00 ET (08:00 GMT)
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