Dignity in whole-business future cashflows securitisation

Funeral operator, Dignity, has securitised its future operational cashflows.

The Issuer, Dignity Finance PLC, has made an internal loan to Dignity (2002) Ltd. Operational cashflows of related group companies, will service the loan payments to the Issuer. Loan receipts will service P&I payable on the Issuer's ABS.

Dignity first issued the ABS in 2003, followed by further issues in 2006. 2010, and 2013. The 2014 issue was expected to replace some of the outstanding ABS and raise funds by issuing additional ABS.

A key rating concern is reputation risk: if Dignity lost potential customers, then its future cashflows would fall and that could result in default on the ABS.

ABS investors (through the Security Trustee) have security of fixed and floating charges and share pledges of Dignity companies, which would enable it to take control of the Dignity group of companies.

source S&P Pre-Sale (2014)

The proceeds of Dignity plc's whole business securitization tap, would be used to fund the acquisition of a large group of funeral businesses. The securitization involved the issue by Dignity Finance plc of (in total) £50,250,000 Class A Secured 6.310 per cent Notes due 2023 and £40,750,000 Class B Secured 8.151 per cent Notes due 2031.

source: DLA Piper