US non-bank lenders back UK charity

Pricoa Capital and Metropolitan Life Insurance are lending £100 million to healthcare charity Nuffield Health.

UK health charity, Nuffield Health, has signed a £330 million ($530.5 million; €419.9 million) refinancing deal with a combination of banks and institutional lenders, according to a statement. The healthcare provider opted for institutional lenders over a range of other non-traditional borrowing options, said a source close to the deal.

US-headquartered direct lenders Pricoa Capital and Metropolitan Life Insurance Company provided £100 million ($160.7 million; €127.3 million) of the financing package. The fixed rate loans have tenors of 10 and 12 years, according to the statement.

Three of Nuffield’s existing lenders, Barclays, Royal Bank of Scotland and Santander joined the floating-rate bank facilities and were joined by HSBC and Siemens Financial Services in providing the £230 million seven-year credit line.

Nuffield was advised on the refinancing by Rothschild.

When it began the refinancing process, Nuffield met around eight non-banks lenders to discuss a potential facility. It also spoke to lenders on the structured finance side as well as other alternative financiers but opted not to secure debt against its hospitals or other assets, said a source close to the situation.

From the conversations with institutions, Pricoa and Met Life emerged with the most competitive offer, added the source.

“Many companies like to have a portion of long-term debt, with a maturity of perhaps seven to 15 years, alongside their bank debt, which usually has a 5-year maturity,” said Francis Burkitt, managing director at Rothschild. “In those cases, they frequently turn to institutional investors such as life insurance companies and pension funds, which are stable, long-term and essentially passive investors.”

In 2011, Nuffield signed a £230 million refinancing loan with AIB, Barclays, Co-operative Bank, Royal Bank of Scotland and Santander, according to a statement on its website.

The health charity recently bought nine outlets of gym chain, Virgin Active, and is developing a major health project in central Manchester with Manchester Metropolitan University, including a state of the art hospital.