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The UK port industry is the largest of its kind in Europe and of strategic importance to the country’s global economic competitiveness, handling approximately 95% of its imports and exports by volume.
Lloyds Bank has made a strong commitment to the ports sector and wider UK infrastructure in recent years, funding a number of the country’s major harbour operators and acting as Mandated Lead Arranger, Bookrunner and Hedge provider on all six rolling stock company (ROSCo) transactions over the last 2 years.
Associated British Ports (“ABP”), the owner of 21 ports in England, Scotland and Wales, is the most recent industry operator to refinance its senior debt with the support of Lloyds Bank, in the first ports deal to secure finance from the bond market.
The group handles approximately a quarter of the UK’s seaborne trade, and its ports, alongside its other transport-related businesses, form a network capable of handling a diverse range of cargo.
Founded in 1962 as a government-owned body, ABP became a public limited company in 1983, quoted on the London Stock Exchange. The firm was acquired in 2006 by the Admiral consortium, comprising Borealis Infrastructure Management Inc. and Goldman Sachs International, in a public to-private transaction, supported with debt financing from Lloyds Bank.
We provided ABP with a wide spectrum of financing products, acting as Mandated Lead Arranger on a £1.86bn package of senior debt, comprising bridge-to-bond (B2B) and term facilities, and as joint Active Bookrunner on a successful £500m bond issuance, which closed in December 2011.
Alongside its strong existing relationship with the company, we were able to demonstrate our market-leading position in the UK transport infrastructure sector, having successfully secured bond issuances for all three rolling stock companies (ROSCos) in recent years, as well as being the current lender to a number of UK port operators.
The refinancing of ABP drew on the wider expertise of Lloyds Bank, including Debt Capital Markets as Active Bookrunner on the sterling bond issuance, Risk Management as Sole Hedging Bank Coordinator and Execution Bank, Syndication to underwrite the B2B facility and Structured Transaction Management, which provided the liquidity package.
The deal delivered the first port group bond issuance of significant scale against a highly challenging economic backdrop, demonstrating our ability to effectively lead a group of lenders as swap bank coordinator to achieve the optimum hedging strategy for ABP.
Mike Chappell, Head of Project Finance, Europe, at Lloyds Bank, said: “We are delighted to have had the opportunity to support ABP in their refinancing; recognising the importance of the ports sector in supporting UK Infrastructure and economic recovery. This is an excellent example of Lloyds Bank supporting its core customers through the cycle.”
Farouk Ramzan, Head of Corporate Debt Capital Markets, Lloyds Bank concluded: “This refinancing is significant for ABP and the ports industry more broadly. In the future we expect to see other major infrastructure players looking to follow suit and tap the bond markets as a means of diversifying their funding.”
On the decision to work in partnership with Lloyds Bank, Sebastian Bull, CFO of ABP, commented: “We appointed Lloyds Bank because of the Bank’s excellent track record with ABP. Having acted on the original acquisition in 2006, it really understands our business and shares our ambitions for it.”
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