THIS NOTICE IS
IMPORTANT AND REQUIRES THE IMMEDIATE ATTENTION OF THE REGISTERED
AND BENEFICIAL OWNERS OF THE NOTES. ALL DEPOSITARIES, CUSTODIANS
AND OTHER INTERMEDIARIES RECEIVING THIS NOTICE ARE REQUESTED TO
PASS THIS NOTICE TO THE BENEFICIAL OWNERS IN A TIMELY MANNER. IF
NOTEHOLDERS ARE IN ANY DOUBT AS TO THE ACTION THEY SHOULD TAKE,
THEY SHOULD CONSULT THEIR OWN INDEPENDENT PROFESSIONAL ADVISERS
AUTHORISED UNDER THE FINANCIAL SERVICES AND MARKETS ACT 2000 (IF
THEY ARE IN THE UNITED KINGDOM) OR
ANOTHER APPROPRIATELY AUTHORISED INDEPENDENT FINANCIAL ADVISER AND
TAKE SUCH OTHER ADVICE FROM THEIR OWN PROFESSIONAL ADVISERS AS THEY
DEEM NECESSARY, IMMEDIATELY.
IMPORTANT NOTICE
TO THE HOLDERS OF THE
£45,500,000 Class
B1c Mortgage Backed Floating Rate Notes due 2043
(ISIN:
XS0212691660 Common Code: 021269166)
(the "Class B1c
Notes")
£26,250,000 Class
C1c Mortgage Backed Floating Rate Notes due 2043
(ISIN:
XS0212691744 Common Code: 021269174)
(the "Class C1c
Notes")
£22,750,000 Class
D1c Mortgage Backed Floating Rate Notes due 2043
(ISIN:
XS0212692122 Common Code: 021269212)
(the "Class D1c
Notes")
£3,500,000 Class E
Mortgage Backed Floating Rate Notes due 2043
(ISIN:
XS0212692478 Common Code: 021269247)
(The "Class E
Notes")
Issued by
Southern Pacific
Securities 05-1 PLC
(the “Issuer”)
on or about
23 February 2005
The Class B1c Notes, the Class C1c Notes, the Class D1c Notes,
and the Class E Notes are together referred to as the
"Notes".
Capitalised terms in this Notice shall, except where the context
otherwise requires or save where otherwise defined herein, bear the
meanings ascribed to them in the master definitions schedule dated
23 February 2005 between, amongst
others, the Issuer and Capita Trust Company Limited (the
“Trustee”) (as amended and restated from time to time) (the
"Master Definitions Schedule").
On 9 June 2015 the short term
unsecured debt rating of Barclays Bank PLC ("Barclays") was
downgraded by S&P from "A-1" to "A-2" (the "S&P
Downgrade"). Barclays is the GIC Provider, the Account Bank and
the Collection Account Bank for the Transaction.
As a result of the S&P Downgrade, Barclays no longer has the
relevant requisite ratings set out in the relevant transaction
documents, including the Bank Agreement, the Cash/Bond
Administration Agreement or the GIC (the "Relevant
Documents"). The Issuer, the Cash/Bond Administrator
and/or Barclays, as applicable, are required to take certain
remedial action following the S&P Downgrade, as set out in the
Relevant Documents.
In light of the recent downgrading of the ratings of certain of
the Notes by S&P, the Issuer would like to provide an update on
the status of the remedial actions which have been, and which are
being, taken by the Issuer and/or the Cash/Bond Administrator
(acting on behalf of the Issuer) in connection with the S&P
Downgrade. The Issuer, having been informed of the facts
herein by the Cash/Bond Administrator (and not having independently
verified the information contained in this notice), hereby notifies
Noteholders of the following:
1.
Background to the remedial action
1.1 Following the
S&P Downgrade, the Cash/Bond Administrator, on behalf of the
Issuer and in its capacity as the Cash/Bond Administrator,
undertook a market review and entered into discussions with five
financial institutions that met the Rating Agencies’ minimum
counterparty criteria to perform the relevant roles to ascertain
whether one of them would be suitable to be appointed as
replacement Account Bank, GIC Provider or the Collection Account
Bank (as applicable).
2.
Update on the remedial action in relation to the GIC and the
Transaction Account
Following the completion by the Cash/Bond Administrator of its
market review to find a suitable replacement, the Cash/Bond
Administrator notified the Issuer and the Trustee that it has
identified a global banking institution as a potential suitable
replacement to replace Barclays as the GIC Provider and the Account
Bank for the GIC Account and the Transaction Account (the
"Transaction Account Bank"). The specific terms for the
appointment are currently still being discussed between the
Cash/Bond Administrator, the Issuer and the prospective replacement
bank; however in the expectation that commercial agreement will be
reached, it is intended that the appointment will be finalised as
soon as practicable. The Cash/Bond Administrator and the Issuer are
seeking to keep the commercial and legal terms as consistent as
possible to those terms currently in place with Barclays, but it
should be noted that there may be differences required to reflect
commercial and legal changes that have taken place in the market
since the original bank agreement was entered into with Barclays,
in particular it being noted that some differences are required to
be implemented (resulting in potentially lower interest rates to
take into account increased regulatory costs) as a result of the
implementation of such changes, the finalisation of these necessary
changes has unfortunately led to a delay to execution of the
relevant legal documentation whilst the impact of such changes are
being confirmed and finalised.
3.
Update on the remedial action in relation to the Collection
Accounts
3.1 Despite having
conducted its market review and having had discussions with
financial institutions, the Cash/Bond Administrator has not been
able to find a suitably rated financial institution who is willing
to be the replacement account bank for the Collection Accounts (the
"Collection Account Bank"). In relation to the
suitably rated financial institutions that were able to offer
collection account services, most were deterred by the significant
efforts involved in setting up collection account banking
operations, together with the economics of operating such accounts.
The financial institutions were also concerned with the potential
risks, such as direct debit indemnity liability, involved in
operating collection accounts in transactions of this type and at
this stage of maturity.
3.2 As a result, the
Cash/Bond Administrator has advised the Issuer that there is
currently no viable alternative but to retain Barclays in the role
of Collection Account Bank and to lower the rating requirements of
the Collection Account Bank in the Relevant Documents to match
Barclays' current rating. The Cash/Bond Administrator understands
that this approach may be possible on the basis that Barclays
currently meets each Rating Agency’s published minimum counterparty
rating criteria for the Collection Account Bank role and is
therefore able to continue to support a transaction with a "AAA"
rated note.
3.3 Barclays have
communicated to the Cash/Bond Administrator that they are prepared
to remain in their Collection Account Bank role provided that they
are able to amend their fee structure. They have asked that
the current tariffs, which are based largely on numbers of items
processed, are replaced with a fixed fee structure (including an
annual charge), and if such changes are agreed and implemented,
this will result in higher Collection Account Bank
charges.
3.4 Barclays considers
that these increased fees are necessary to offset the risks of
operating the Collection Accounts, against the economics of
performing the Transaction Account Bank and GIC Provider roles. The
Trustee is not required to consent to the increase in fees charged
by Barclays as the Transaction Documents already allow for the
increase to be implemented.
3.5 Barclays have
communicated to the Cash/Bond Administrator that they will require
that it remains as a Secured Creditor under the Deed of Charge in
its capacity as the Collection Account Bank and therefore rank in
the relevant Priority of Payments at the same level as it does as
the existing Account Bank. The New Transaction Account Bank
(when selected) will accede to the Deed of Charge to become a
Secured Creditor and to also rank at the same level as Barclays
currently does in its capacity as Account Bank.
4. Except
to the extent the Trustee’s consent is required under the
Transaction Documents to implement the replacement of Barclays as
Account Bank and GIC Provider and to retain Barclays as Collection
Account as a result of the S&P Downgrade, in accordance with
normal practice, the Trustee expresses no opinion as to the merits
of the steps taken by the Cash/Bond Administrator or the Issuer (as
applicable) as described in this Notice. It has, however,
authorised it to be stated that, on the basis of the information
set out in this Notice, it has no objection to the Notice being
sent to the Noteholders. The Trustee has, however, not been
involved in preparing this Notice and makes no representation that
all relevant information has been disclosed to Noteholders in this
Notice.
The Issuer will keep the Noteholders updated on developments in
respect to the proposed remedial actions.
Queries may be addressed to the Issuer as follows:
Southern Pacific Securities 05-1
PLC
4th Floor
40 Dukes Place
London EC3A 7NH
Attention: The
Directors
Telephone: +44 203 367
8200
Fax:
+44 203 170 0246
e-mail: spvservices@capitafiduciary.co.uk
Ref:
Southern Pacific Securities 05-1 PLC
This notice is given by the Issuer.
Dated 4 February 2016