The specialist securitisation team of leading Scottish law firm, Shepherd and Wedderburn, has acted alongside Allen & Overy in advising the debt funders of the purchase by U.S. investment firm, Cerberus Capital Management, of Northern Rock’s £13bn asset portfolio – the largest ever financial asset sale by a European government. Shepherd and Wedderburn advised the arrangers of the financing on the transaction, leading on Scots law structuring and advice.
Following a competitive bidding process, the asset portfolio, which includes mortgages acquired by the UK government during the financial crisis, is being sold by UK Asset Resolution Limited to Cerberus and its affiliates. Cerberus is purchasing approximately £13bn worth of assets which includes £12bn loans currently within the ‘Granite’ securitisation and a further £1bn of other loans. The sale comprises performing and non-performing residential mortgages as well as linked unsecured loans from the legacy mortgage book of NRAM, the former Northern Rock plc residential mortgage business.
The five-strong Shepherd and Wedderburn team, led by partner Hamish Patrick and solicitor Neil Campbell, advised the lenders on all Scots law matters relating to the financing and purchase of the portfolio. A separate team led by Finance and Restructuring partner, Rod Macleod also advised an affiliate of Cerberus on the transaction. Hamish Patrick, commented:
“This was a significant and complex transaction which, from a Scottish perspective, involved putting in place structures that would allow the purchase to happen. The transaction demonstrates the growing market confidence in assets such as residential mortgage portfolios. It was great to be involved in a transaction which returns value to the UK government and taxpayer.”
The transaction is the most recent in a series of substantial retail and commercial loan portfolio transactions on which the Shepherd and Wedderburn team has acted, reinforcing the continuing demand for such assets in the market place.