Mills & Reeve have advised the University of Northampton on financing for their new multi-million pound Waterside Project, which will see the university relocate to a new purpose built campus in the centre of Northampton.
The campus relocation is being funded by a combination of university reserves; capital receipts from the sale of the existing campus; £60 million in loans from the Public Works Loans Board; and a £231.5 million 40 year bond yielding 3.302 per cent per annum to investors.
Both the bond issue and the PWLB loans have been guaranteed by HM Treasury as part of the UK Guarantees Scheme, which is designed to provide a sovereign-backed guarantee on a commercial basis to help infrastructure projects access finance.
Sarah Seed, banking partner at Mills & Reeve who specialises in alternative sources of financing for not-for-profit institutions, said: “This is a landmark moment for the University – it has secured finance on extremely competitive terms to facilitate its planned relocation to a new campus in the city centre. However, it is also a landmark moment for the Higher Education sector as a whole, as this is the first time that a university has utilised the UK Guarantees scheme.
“As potential investors looked to the credit quality of HM Treasury rather than the underlying debtor, the University did not need to obtain a credit rating either for itself or for the underlying bond. This form of credit support has huge potential to support a wider range of universities in accessing low-cost debt.”
Mills & Reeve has been advising on the Waterside Project for a number of years and has played a key role in assisting the university through a series of major challenges. It is rare for a university to undertake such a major relocation project given the complexities involved.
The brownfield site was fraught with intricacies and substantial infrastructure works have been necessary, including the construction of a new road, and two bridges across the River Nene. Historic listed buildings had to be dealt with correctly and there was a large decontamination job, including substantial amounts of asbestos to be tackled.
The Waterside Project will see the university relocate to a new purpose built campus in the centre of Northampton. The university wants the new campus to be a central part of the town and actively draw people in to use the commercial facilities which will also be based there.
Mills & Reeve has a growing reputation for advising on public and private bonds for universities. In December 2013 the firm advised on first-of-its kind aggregated bond for 18 Cambridge University, which followed the launch of a £350 million public bond issue by the University of Cambridge in October 2012 and a £300 million public bond issue by the University of Manchester in July 2013.
Mills & Reeve advised the university and the issuer. Pinsent Masons advised HM Treasury as guarantor (Stephen Tobin), and the bond arrangers (Ed Sunderland). Allen & Overy advised the Bond Trustee (Cameron Mitcham).
