RCB Bonds PLC (“RCB”) has announced the launch of the Charities Aid Foundation 3.5% Bonds due 2031 (the “New Bonds”) together with the launch of a tender offer by Charities Aid Foundation (“CAF” or the “Charity”).
CAF previously raised £20 million in 2016 through an issue by RCB of 5% bonds due 2026 (the “Old Bonds”). CAF has now made an offer to buy back the Old Bonds from investors (the “tender offer”) on the terms and subject to the restrictions set out in the tender offer memorandum relating to the tender offer (the “Tender Offer Memorandum”) and will use the proceeds of the New Bonds to settle the tender offer, with any additional funds raised being used to further its charitable objects.
CAF was established as an independent trust in 1974 and is the fourth largest registered charity in England and Wales by income. It is the parent charity of a group that comprises US and Canadian foundations and wholly-owned trading subsidiaries CAF Financial Solutions and CAF Bank, which provides banking services to over 14,000 UK charities and social purpose organisations.
CAF acts as a meeting point connecting companies, private philanthropists, charitable foundations, governments, charities and not-for-profit enterprises around the world. Its work connects organisations, institutions and individuals working to ensure that everyone has a stake in the future.
The Charity’s purpose is to accelerate progress in society towards a fair and sustainable future for all. It delivers on this purpose in a variety of ways, including: partnering with government and donors to achieve maximum impact, including the delivery of large-scale grant making programmes; working with regular donors to help them support charities; helping companies deliver employee charitable giving and to support their communities and chosen charities; enabling charities to do more life-changing work with lasting benefits by providing them with funding and financial solutions; and acting as a voice for the charitable sector with government and external stakeholders to deliver supportive legal, fiscal and regulatory conditions for donors, charities and social enterprises.
The Charity provides a range of products and services to individuals, companies, charities and not-for-profit social organisations. It enables individuals to put money aside tax-effectively to support their philanthropic aims at any time. It helps nearly 2,800 corporate clients in the UK and US to identify the right charity partners for donations and to develop skilled volunteering programmes, while its Give As You Earn scheme is the most popular payroll-giving scheme in the UK. In addition to advisory services, it provides charities with financial products including banking, investments, fundraising tools and social investment.
The Charity has a history of growth and innovation. The scale of its activities in the UK, US and Canada in the last year, and the impact of the Covid-19 pandemic on the charity sector, are signs that CAF’s services are needed today more than they have ever been.
In the Charity’s 2020/21 financial year, donations rose by 43%, or more than £300 million, with funds entrusted topping £1 billion for the first time as private philanthropists and businesses responded to the Covid-19 pandemic with remarkable generosity. In 2020/21, CAF sent £958 million in donations to charities in more than 100 countries around the world.
The New Bonds
The New Bonds will be issued by RCB, a special purpose issuing vehicle created to connect charitable or ethical organisations seeking unsecured loan finance with investors looking for fixed income bonds listed on the London Stock Exchange. The funds raised will be loaned, via a loan agreement, to the Charity.
The New Bonds are available to wholesale and retail investors and will pay a fixed rate of interest at 3.5% per annum until 8 December 2031, payable twice yearly on 8 June and 8 December of each year, with the first coupon payment being made on 8 June 2022. The New Bonds are expected to mature on 8 December 2031 with a final legal maturity on 8 December 2033.
At any time during the life of the New Bonds, investors are permitted to sell the New Bonds (within market hours and in normal market conditions) on the open market through their stockbroker.