Insurer refinances £250m of Porterbrook debt

Global insurance group MetLife has provided Porterbrook with a £250m, 25-year amortising facility, which was used to refinance loans taken out by a consortium of investors shortly after it acquired the rolling stock company in 2008.

The Metropolitan Life Insurance Company (MetLife), one of the world’s largest insurance groups, has helped Porterbrook to refinance £250 million (€289 million: $412 million) of debt,  the UK rolling stock company announced in a statement.

The 25-year amortising bi-lateral facility has been rated BBB by ratings agency Standard & Poor and will be used to retire loans taken out in 2008, following Porterbrook’s acquisition by a consortium of infrastructure investors led by Deutsche Bank.

Paul Francis, managing director of Porterbrook, said “the [loan] facility has the longest maturity in the sector” and has “further diversified the group’s funding sources”. In a statement, Porterbrook added that the MetLife refinancing halves the amount of debt maturing in late 2013, “meaning that we are less exposed to marked conditions when we look to complete a further bond issue over the next 12 to 18 months”.

JP Morgan and Millbank advised Porterbrook on the refinancing. Porterbrook was acquired in late 2008 by a consortium comprising Deutsche Bank, Lloyds and French infrastructure fund Antin Infrastructure for £2 billion. The asset was previously owned by Abbey National, which is now part of Spanish bank Santander.

UK rolling stock companies have proved popular with infrastructure investors due to their long-term contracts and steady cash flows. The most recent deal in the sector has been the £2.1 billion acquisition of Eversholt Rail Group, previously owned by UK bank HSBC, by a team of investors including 3i Infrastructure, Morgan Stanley Infrastructure Partners and STAR Capital Partners. 

In June 2008, Royal Bank of Scotland sold its rolling stock leasing firm, Angel Trains, to Australian investor Babcock & Brown for some £3.6 billion. Following Babcock & Brown’s demise, Angel Trains is now a portfolio company of Babcock & Brown spinout Arcus Infrastructure Partners.