Swan rescue merger delayed as assurances sought from lenders

The breach was first reported by Inside Housing in October last year. M&G Trustee Company acknowledged that auditors were unable to complete their audit of Swan’s accounts for the financial year up to March 2022 because of the collapse of its year-long merger discussions with Orbit.

Following the collapse of those talks, giant housing association Sanctuary began merger discussions with Swan in late September.

The merger was originally due to be completed on 1 December but this deadline was missed as a result of ongoing talks with “third parties”.

If those talks with M&G Trustee Company and others are successful, Sanctuary’s acquisition is now due to be completed at the end of this month.

Following the merger’s completion, Sanctuary is seeking the consent of the bondholders to amend the loan agreement to allow it to submit its own financial statements on a consolidated basis for the financial year ending 31 March 2023 onwards.

M&G Trustee Company has been contacted to provide an update on the agreement.

Swan’s merger talks with Sanctuary have been complex since they were announced a few months ago. 

At the end of November last year it was revealed that 11,500-home Swan had agreed a £50m secured loan from 105,000-home Sanctuary to give it “additional liquidity”. 

It came after Swan said in October that it was facing a potential annual impairment of £178.4m and had £24.3m in cash, which it said would only fund its subsidiaries until “early December”. 

At that time, credit ratings agency Standard & Poor’s said that Swan required external support to “remain a viable business”.

In May 2022, Swan was also found to have breached the RSH’s Home Standard after around 1,500 overdue fire safety remedial actions were discovered.

Additionally, Swan was handed a G3/V3 rating around one year ago, as the regulator said there had been a “material deterioration” in the landlord’s financial position.