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Orbit lent troubled Swan £40m before merger talks broke down

Large housing association Orbit lent sums of £40m to troubled landlord Swan before merger talks broke down between the two last month.

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A stock market update revealed that Orbit’s multimillion-pound loan to Swan was made one month after merger talks began in December last year #UKhousing

In its latest update to the stock market, Swan revealed that Orbit had advanced the association a secured loan of £25m, which was subsequently increased to £40m in March 2022, after merger talks were announced in December last year

During the merger process, an audit of Swan’s 2021/22 accounts by Grant Thornton revealed a potential annual impairment of £178.4m in relation to its development plans.

The auditor said it had “insufficient assurance” on the level of impairment and that the landlord remains a “going concern” on the basis of a merger. 

Inside Housing reported last week Swan was one of three landlords that had announced they would be submitting their financial accounts late to the Regulator of Social Housing (RSH) this year.

The trading update revealed that talks with auditors about the timing of the signing of the audited accounts and the wording in the auditor’s report are still continuing.


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On the same day news of talks between Orbit and Swan emerged last year, the RHS rated Swan non-compliant on governance and financial viability.

The regulatory judgement said the downgrade was partly due to a “material deterioration” in Swan’s financial position.

When the landlord’s merger talks with Orbit broke down at the end of last month, Sanctuary announced on the same day that it had “entered into discussions with Swan Housing Association to form a business combination”.

If the talks are successful, Swan will become a subsidiary of Sanctuary.

The stock market update also revealed that Swan is in discussion with Sanctuary to refinance the Orbit loan and replace it with a loan of its own.

The statement said: “Swan’s management and board are engaging closely with the housing regulator and its auditors to keep them appraised of the status of the potential merger discussions with Sanctuary. 

“Swan and Sanctuary are engaging with Swan’s auditors to ensure that the accounts will be signed off if the Sanctuary merger goes ahead.”

The 12,000-home landlord is also discussing maintaining an effective “standstill” position in relation to anticipated breaches of its loan covenants, including the late filing of audited accounts, with its main lenders. 

This position should provide the association with some financial stability while it agrees restructuring plans with creditors, alongside the merger talks with Sanctuary.

In response, Swan said: “The leadership team at Swan is aware that the news in recent days may have been unsettling for customers and stakeholders who are uncertain about the next steps for Swan.  

“We would like to reassure you that Swan is proceeding at pace with its discussions with Sanctuary Housing Association, one of the UK’s largest and strongest operators in our sector, with both parties working towards Swan becoming a subsidiary of Sanctuary on 30 November 2022. 

“In the meanwhile, we will continue to focus on the delivery of services to our customers and stakeholders, while progressing the partnership with Sanctuary. We will provide further updates as soon as we are able to do so.”

Just days after Swan’s nearly year-long merger talks with Orbit collapsed, the landlord announced that its interim finance director had left after nine months in the role.

The Essex-based association announced that Jeremy Vickers left at the end of September “as planned”, following the end of his fixed-term contract.

Mr Vickers, a former executive at Metropolitan Thames Valley, is the second finance boss to leave Swan in 12 months. 

He started as interim finance director in December 2021 after the resignation of James King.

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