35UC Sthn.pac.fin4as

 
TIDM35UC 
 
-     THIS NOTICE IS IMPORTANT AND REQUIRES THE IMMEDIATE ATTENTION OF THE 
REGISTERED AND BENEFICIAL OWNERS OF THE NOTES. ALL DEPOSITARIES, CUSTODIANS AND 
OTHER INTERMEDIARIES RECEIVING THIS NOTICE ARE REQUESTED TO PASS THIS NOTICE TO 
THE BENEFICIAL OWNERS IN A TIMELY MANNER. IF NOTEHOLDERS ARE IN ANY DOUBT AS TO 
    THE ACTION THEY SHOULD TAKE, THEY SHOULD CONSULT THEIR OWN INDEPENDENT 
 PROFESSIONAL ADVISERS AUTHORISED UNDER THE FINANCIAL SERVICES AND MARKETS ACT 
 2000 (IF THEY ARE IN THE UNITED KINGDOM) OR ANOTHER APPROPRIATELY AUTHORISED 
    INDEPENDENT FINANCIAL ADVISER AND TAKE SUCH OTHER ADVICE FROM THEIR OWN 
          PROFESSIONAL ADVISERS AS THEY DEEM NECESSARY, IMMEDIATELY. 
 
                    IMPORTANT NOTICE TO THE HOLDERS OF THE 
 
    GBP305,200,000 Class A Mortgage Backed Floating Rate Notes due 2042 (with 
     Detachable A Coupons) (the "Class A Notes") (Reg S ISIN XS0190203124) 
 
GBP21,000,000 Class B Mortgage Backed Floating Rate Notes due 2042 (the "Class B 
                       Notes") (Reg S ISIN XS0190204445) 
 
GBP11,550,000 Class C Mortgage Backed Floating Rate Notes due 2042 (the "Class C 
                       Notes") (Reg S ISIN XS0190205178) 
 
 GBP8,750,000 Class D Mortgage Backed Floating Rate Notes due 2042 (the "Class D 
                       Notes") (Reg S ISIN XS0190205681) 
 
 GBP3,500,000 Class E Mortgage Backed Floating Rate Notes due 2042 (the "Class E 
                       Notes") (Reg S ISIN XS0190206143) 
 
                                   issued by 
 
                      Southern Pacific Financing 04-A PLC 
 
                                (the "Issuer") 
 
                           on or about 26 April 2004 
 
The Class A Notes, Class B Notes, Class C Notes, Class D Notes and Class E 
Notes are together referred to as the "Notes". 
 
Capitalised terms in this Notice shall, except where the context otherwise 
requires or save where otherwise defined herein, bear the meanings ascribed to 
them in the master definitions schedule dated 26 April 2004 between, amongst 
others, the Issuer and Capita Trust Company Limited (the "Trustee") (as amended 
and restated from time to time) (the "Master Definitions Schedule"). 
 
On 9 June 2015 the short term unsecured debt rating of Barclays Bank PLC (" 
Barclays") was downgraded by S&P from "A-1" to "A-2" (the "S&P Downgrade"). 
Barclays is the GIC Provider, the Account Bank and the Collection Account Bank 
for the Transaction. 
 
Prior to the S&P Downgrade, Barclays did not have the relevant requisite 
ratings set out in the relevant transaction documents, including the Bank 
Agreement, the Cash/Bond Administration Agreement or the GIC (the "Relevant 
Documents"), but did have the relevant requisite ratings required by the 
current S&P counterparty criteria to act as the Account Bank, GIC Provider and 
Collection Account Bank, and therefore the Transaction Parties were in the 
process of agreeing amendments to the Relevant Documents to amend the rating 
requirements to be in line with such criteria. However, as a result of the S&P 
Downgrade, Barclays no longer has the relevant requisite ratings set out in the 
relevant transaction documents, including the Relevant Documents, or the 
relevant requisite ratings required by the current S&P counterparty criteria to 
act as the Account Bank and GIC Provider (Barclays does continue to have the 
requisite rating required by the current S&P counterparty criteria to act as 
the Collection Account Bank). The Issuer, the Cash/Bond Administrator and/or 
Barclays, as applicable, are required to take certain remedial action following 
the S&P Downgrade, as set out in the Relevant Documents. 
 
The Issuer would like to provide an update on the status of the remedial 
actions which have been, and which are being, taken by the Issuer and/or the 
Cash/Bond Administrator (acting on behalf of the Issuer) in connection with the 
S&P Downgrade.  The Issuer, having been informed of the facts herein by the 
Cash/Bond Administrator (and not having independently verified the information 
contained in this notice), hereby notifies Noteholders of the following: 
 
1.          Background to the remedial action 
 
1.1        Following the S&P Downgrade, the Cash/Bond Administrator, on behalf 
of the Issuer and in its capacity as the Cash/Bond Administrator, undertook a 
market review and entered into discussions with five financial institutions 
that met the Rating Agencies' minimum counterparty criteria to perform the 
relevant roles to ascertain whether one of them would be suitable to be 
appointed as replacement Account Bank, GIC Provider or the Collection Account 
Bank (as applicable). 
 
2.          Update on the remedial action in relation to the GIC and the 
Transaction Account 
 
Following the completion by the Cash/Bond Administrator of its market review to 
find a suitable replacement, the Cash/Bond Administrator notified the Issuer 
and the Trustee that it has identified a global banking institution as a 
potential suitable replacement to replace Barclays as the GIC Provider and the 
Account Bank for the GIC Account and the Transaction Account (the "Transaction 
Account Bank"). The specific terms for the appointment are currently still 
being discussed between the Cash/Bond Administrator, the Issuer and the 
prospective replacement bank; however in the expectation that commercial 
agreement will be reached, it is intended that the appointment will be 
finalised as soon as practicable. The Cash/Bond Administrator and the Issuer 
are seeking to keep the commercial and legal terms as consistent as possible to 
those terms currently in place with Barclays, but it should be noted that there 
may be differences required to reflect commercial and legal changes that have 
taken place in the market since the original bank agreement was entered into 
with Barclays, in particular it being noted that some differences are required 
to be implemented (resulting in potentially lower interest rates to take into 
account increased regulatory costs) as a result of the implementation of such 
changes, the finalisation of these necessary changes has unfortunately led to a 
delay to execution of the relevant legal documentation whilst the impact of 
such changes are being confirmed and finalised. 
 
3.          Update on the remedial action in relation to the Collection 
Accounts 
 
3.1        Despite having conducted its market review and having had 
discussions with financial institutions, the Cash/Bond Administrator has not 
been able to find a suitably rated financial institution who is willing to be 
the replacement account bank for the Collection Accounts (the "Collection 
Account Bank").  In relation to the suitably rated financial institutions that 
were able to offer collection account services, most were deterred by the 
significant efforts involved in setting up collection account banking 
operations, together with the economics of operating such accounts. The 
financial institutions were also concerned with the potential risks, such as 
direct debit indemnity liability, involved in operating collection accounts in 
transactions of this type and at this stage of maturity. 
 
3.2        As a result, the Cash/Bond Administrator has advised the Issuer that 
there is currently no viable alternative but to retain Barclays in the role of 
Collection Account Bank and to lower the rating requirements of the Collection 
Account Bank in the Relevant Documents to match Barclays' current rating. The 
Cash/Bond Administrator understands that this approach may be possible on the 
basis that Barclays currently meets each Rating Agency's published minimum 
counterparty rating criteria for the Collection Account Bank role and is 
therefore able to continue to support a transaction with a "AAA" rated note. 
 
3.3        Barclays have communicated to the Cash/Bond Administrator that they 
are prepared to remain in their Collection Account Bank role provided that they 
are able to amend their fee structure.  They have asked that the current 
tariffs, which are based largely on numbers of items processed, are replaced 
with a fixed fee structure (including an annual charge), and if such changes 
are agreed and implemented, this will result in higher Collection Account Bank 
charges. 
 
3.4        Barclays considers that these increased fees are necessary to offset 
the risks of operating the Collection Accounts, against the economics of 
performing the Transaction Account Bank and GIC Provider roles. The Trustee is 
not required to consent to the increase in fees charged by Barclays as the 
Transaction Documents already allow for the increase to be implemented. 
 
3.5        Barclays have communicated to the Cash/Bond Administrator that they 
will require that it remains as a Secured Creditor under the Deed of Charge in 
its capacity as the Collection Account Bank and therefore rank in the relevant 
Priority of Payments at the same level as it does as the existing Account 
Bank.  The New Transaction Account Bank (when selected) will accede to the Deed 
of Charge to become a Secured Creditor and to also rank at the same level as 
Barclays currently does in its capacity as Account Bank. 
 
4.          Except to the extent the Trustee's consent is required under the 
Transaction Documents to implement the replacement of Barclays as Account Bank 
and GIC Provider and to retain Barclays as Collection Account as a result of 
the S&P Downgrade, in accordance with normal practice, the Trustee expresses no 
opinion as to the merits of the steps taken by the Cash/Bond Administrator or 
the Issuer (as applicable) as described in this Notice. It has, however, 
authorised it to be stated that, on the basis of the information set out in 
this Notice, it has no objection to the Notice being sent to the Noteholders. 
The Trustee has, however, not been involved in preparing this Notice and makes 
no representation that all relevant information has been disclosed to 
Noteholders in this Notice. 
 
The Issuer will keep the Noteholders updated on developments in respect to the 
proposed remedial actions. 

(MORE TO FOLLOW) Dow Jones Newswires

February 04, 2016 12:18 ET (17:18 GMT)

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