The Longhurst Group needed to secure consent from Peterborough Council before its recent merger with Axiom because the local authority is one of its new subsidiary’s lenders.
Longhurst announced last month that Axiom, which owned more than 2,300 homes across Peterborough, Cambridgeshire and Lincolnshire, had become a subsidiary of its group.
Following the tie-up, which was suppported by Savills Financial Consultants, Longhurst owns and manages around 21,000 properties across 50 separate local authority areas.
As part of the negotiations that led to Axiom joining Longhurst, Savills helped to secure consent for the merger from Peterborough Council, which had a £30m loan agreement with the association.
The loan is lent on from the Public Works Loan Board and repayable in July 2045, and £7.2m is currently drawn.
Following the merger, Peterborough’s funding remains secured on Axiom’s properties.
Rob Griffiths, chief financial officer of Longhurst, said that the process had not been as ‘straightforward’ as securing a consent from a mainstream lender because the latter type of organisation tended to have a lot more experience of such transactions. It was the first time that Peterborough had had to provide lender’s consent.
‘Because it was a local authority lending into the sector and it wasn’t a normal bank facility, we probably had to do a bit more work to secure the consent and go through the business case.’
Mr Griffiths, who is also deputy chief executive of Longhurst, said that Peterborough had had to undertake more due diligence, which had resulted in a longer consent process.
‘It was about not having the same sort of base knowledge about how our business plans are structured which obviously the banks have.’
The transaction was the second time Savills has worked with a local authority to secure lending consent.
The consultancy had previously helped Guinness to secure consent from Warrington Council, which had lent to Wulvern prior to its merger with the latter earlier this year.