TIDM72UH
RNS Number : 2812O
Preferred Residential Securities 7
05 February 2016
- 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
GBP309,600,000 CLASS A2 MORTGAGE BACKED FLOATING RATE NOTES DUE
2041 (ISIN: XS0183097939 Common Code: 018309793)
WITH CLASS A DETACHABLE COUPONS DUE 2006
(ISIN: XS0183098820 Common Code: 018310155)
GBP40,500,000 CLASS B MORTGAGE BACKED FLOATING RATE NOTES DUE
2041
(ISIN: XS0183101558 Common Code: 018310228)
GBP37,500,000 CLASS C MORTGAGE BACKED FLOATING RATE NOTES DUE
2041
(ISIN: XS0183102283 Common Code: 018310228)
GBP6,000,000 CLASS D MORTGAGE BACKED FLOATING RATE NOTES DUE
2041
(ISIN: XS0183102879 Common Code: 018310287)
issued by
Preferred Residential Securities 7 PLC
(the "Issuer")
on or about 31 December 2003
The Class A2 Notes, Class B Notes, Class C Notes and Class D
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
31 December 2003 between, amongst others, the Issuer and BNY Mellon
Corporate Trustee Services 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, the Trustee 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 is 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, provided such rating criteria
can be waived and/or incorporated into the Relevant Documents
(which will require the consent of the Trustee and/or the parties
to the Relevant Documents).
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.
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.
Queries may be addressed to the Issuer as follows:
Preferred Residential Securities 7 PLC
c/o Wilmington Trust SP Services (London) Limited
February 05, 2016 10:28 ET (15:28 GMT)
Third Floor
1 King's Arms Yard
London EC2R 7AF
Attention: The Directors
Telephone: +44 (0) 20 7397 3600
Fax: +44 (0) 20 7397 3601
e-mail: transactionteam@wilmingtontrust.com
Ref: Preferred Residential Securities 7 PLC
This notice is given by the Issuer.
Dated 4 February 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
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