Sector developments and company hires

Dignity Finance restructuring mooted

UK funeral provider Dignity has launched a consent solicitation with noteholders of its whole business securitisation, Dignity Finance, in relation to a deleveraging proposal. Following the award of a temporary covenant waiver by the class A noteholders, the company has continued to work on a long-term solution to improve the group's capital structure.

As part of implementing this strategy, Dignity is contemplating a potential transaction involving the realisation of value from selected crematoria assets, with the proceeds to be applied in a partial redemption of the class A notes. The firm is also seeking a series of amendments to provisions within the financing documents, in order to provide operational flexibilities and to bring the Dignity financing structure more in line with recent securitisation structures.

As a condition to this consent proposal, it will be required to inject a minimum of £70m into the securitisation group companies to partially repay some of the class A notes outstanding - including the payment of a redemption premium - in consideration for assets leaving the securitisation group, if a potential transaction in relation to the crematoria assets becomes unconditional within 12 months of noteholder approval. This will result in a deleveraging of the group and a positive impact on the underlying financial ratios.

The assets subject to the proposals are seven crematoria where the freehold and leasehold properties are owned by companies outside of the securitisation group and leased to Dignity Funerals. The portfolio is expected to generate a total of £6.7m EBITDA for the group. As part of any potential transaction involving these crematoria assets, Dignity may enter into an agreement to continue operating these assets.

In other news…

EMEA

Bryan Cave Leighton Paisner continues the expansion of its global real estate practice with the hire of Will Trotman as real estate structured debt partner. Trotman joins the team in London from Linklaters where he had served as counsel since 2017, and brings extensive experience across RMBS, CMBS, warehouse facilities, trade receivables, and supply chain finance working for arrangers, managers, lenders, investors, guarantors, and originators. Trotman’s appointment marks a major development in the firm’s position, establishing itself as an integrated one-stop solutions firm for clients both originating real estate finance deals and structuring off balance sheet outcomes from those loans.

Hudson, Lone Star charged over tax liability

The US SEC has charged Hudson Advisors and Lone Star Global Acquisitions for including Hudson’s owner’s anticipated income tax liability as a component of certain fees charged to 14 private equity funds they managed. Hudson and Lone Star Global have agreed to pay US$11.2m in civil penalties and have reimbursed the affected funds US$68.5m, which includes interest on the undisclosed tax liability charges.

According to the SEC’s order, between at least 2005 and 2017, Hudson included US$54.6m of its owner’s anticipated US tax liability in fees charged to the funds. By law, these tax liabilities were payable by the owner rather than by Hudson.

The SEC’s order finds that Hudson and Lone Star Global never disclosed the inclusion of these tax liabilities to their clients. The order also finds that Hudson and Lone Star Global were not authorised to charge this fee component without full and fair disclosure to the funds. Finally, the order finds that Hudson and Lone Star Global failed to implement appropriate policies and procedures in connection with conflicts of interest and disclosure of fees charged to advisory clients.

Without admitting or denying the SEC’s findings, Hudson and Lone Star Global agreed to a cease-and-desist order finding that they violated Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rules 204(6)-7 and 206(4)-8 thereunder.

North America

Post Advisory Group has hired new portfolio manager, Kevin Farley, as it works to build out its CLO and structured credit business. Farley joins the firm’s CLO and structured credit platform with more than 25 years of experience across financial markets, most recently operating as a CLO trader at Wells Fargo. Post Advisory hopes Farley’s addition to the team will assist its mission to provide clients with investment strategies that offer strong downside protection, low volatility, and low correlations to other asset classes.

Vista Equity Partners has appointed a securitisation veteran as md of capital & partner solutions as it works to expand its credit team. Michael Charlton will be responsible in his new role for leading investor relations efforts for Vista’s credit platform, Vista Credit Partners. Charlton will report to senior md and global head of capital & partner solutions, Greg Myers. He joins the firm with more than 30 years of experience across the industry from Anchorage Capital Group where he most recently operated as md and global head of business development and investor relations.