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As part of the refinancing Craegmoor fully redeemed all the outstanding notes of
Craegmoor Funding 2 is a £245m securitisation-financing vehicle raised by Craegmoor in August 2003 led by Barclays Capital. This package allowed Craegmoor to pay down the debt behind Legal and General’s £200m buyout of the group in July 2001.
Securitisation forms an integral part of Craegmoor’s funding strategy, one that is influenced by its growing portfolio. Since its first ABS in 1996, Craegmoor has been adding assets to its book, warehousing them first and then securitising them when the opportunity presents itself.
Craegmoor has overcome the problems associated with the healthcare sector towards the end of the 1990s and built a reputation for itself. As well as acquiring new facilities it has moved away from elderly care to the higher fee paying area of specialist care.
Part of its strategy has been to not pay dividends to shareholders, but instead to re-invest surplus cash in specialist care homes, which have generated higher returns. Investors have become familiar with its business model and were keen to participate in the issue, feeling comfortable with the structure.
According to Craegmoor, the signing of this latest deal substantially reduces its ongoing debt service obligations and provides it with the financial and operational flexibility to move to the next stage of its development.
Ted Smith, chief executive of Craegmoor says: “This is a highly significant milestone for Craegmoor. As well as improving the quality of our estate, we have invested heavily in improving our clinical governance and HR platforms as well as in training programmes for our 6,700 employees.