The £50m loan replaces loan originally made by Orbit and comes ahead of planned merger on 30 November
Sanctuary has provided a £50m secured loan to the troubled housing association Swan ahead of the organisations’ potential merger at the end of this month.
The loan from Sanctuary Affordable Housing Limited, an arm of the 105,000-home housing association, refinances that advanced by the Orbit Group made this year.
It comes after it emerged last month that Swan only has enough cash left to last until early December, It has also breached lending covenants, but funder M&G has said it would not act on the breaches if Swan’s merger is finalised by 30 November.
Sanctuary said the “possible business combination”, which would result in Swan becoming its subsidiary, was “still subject to the ongoing due diligence and the approval of the boards of both organisations”.
The Orbit Group granted a one-year secured loan facility in January this year of £25m and increased it to £40m in March.
But merger talks between Orbit and Swan ceased at the end of last month after a “detailed due diligence process” and Sanctuary started discussions to take over the 11,500-home Swan.
Orbit started looking at a potential merger last December after the Regulator of Social Housing (RSH) found Swan to be non-compliant with the governance and financial viability standard.
The RSH’s ruling came after the Essex and east London-based Swan, which had been a pioneer of using modern methods of construction (MMC) in the social housing sector, suffered a “material deterioration in financial position”.
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