NextEnergy Solar is pleased to announce the signing of a GBP150 million debt facility with a syndicate of lenders including Macquarie Infrastructure Debt Investment Solutions, National Australia Bank and Commonwealth Bank of Australia.
The Facility provides long-term debt financing, with a maturity in 2035 that matches the regulated life of the portfolio, and comprises a mix of fixed rate and inflation-linked debt products with a blended cost of 3.32%. This debt structure maximises the portfolio’s cash flow generation whilst eliminating refinancing and interest rate risks.
The Facility is secured by a 241MW portfolio of assets that were previously financed by the GBP120m RCF drawn by NESF over the last two years. The high quality of the existing operating portfolio and the low gearing represented by the Facility allowed NESF to secure attractive terms and conditions. In particular, the Facility has a number of value-adding features, including:
- Bespoke five-year grace period for principal amortisation that contains no principal repayment over that period;
- Staged draw-down to reduce cash-drag and minimise interest expenses in the first year;
- Hybrid structure with bank and institutional tranches to minimise costs of debt;
- Competitive upfront fees and all-in weighted average cost of debt of 3.32%; and
- Retained flexibility over power sales strategy
Summary terms:
Tranche Amount Tenor Amortisation
starting
in
————- ———- ———– ————-
Bank Tranche c. GBP48m 10 years Year 6
————- ———- ———– ————-
RPI Linked c. GBP39m 18.5 years Year 11
Tranche
————- ———- ———– ————-
Fixed Rate c. GBP63m 18.5 years Year 11
Tranche
————- ———- ———– ————-
Total GBP150m
————- ———- ———– ————-
The terms were agreed following a competitive process to select MIDIS, NAB and CBA. The Company’s Investment Advisor, NextEnergy Capital Limited, did not charge any fee for this transaction. The Company was advised by Santander Global Corporate Banking (“Santander”) and Stephenson Harwood LLP as financial and legal advisor whereas the syndicate of lenders were advised by Ashurst LLP.
In addition to the Facility, the Company has pre-existing long-term debt facilities in place with MIDIS (GBP54.7m) and Bayerische Landesbank (GBP43.8m) as well as a credit facility with NIBC maturing in June 2019 (GBP21.7m). Upon full drawdown of the Facility, NESF will have total debt facilities outstanding of GBP270.2 million, which represents a gearing of 37% of pro-forma GAV.(1)
Kevin Lyon, Chairman of NESF, commented: “This long-term debt facility demonstrates the attractiveness of NESF’s high-quality portfolio of operating solar assets to debt investors. We have always been confident in the ability to refinance the RCF in due course with the issuance of long-term debt.
The new facility improves our near-term cash flow generation materially and the expected cash dividend cover, whilst maintaining a conservative level of gearing in line with our stated strategy.
At present we have letters of intent and are in advanced negotiations covering a portfolio of c.197MWp for an investment value of c.GBP205 million. We expect to announce further acquisitions from this pipeline shortly.”
NESF : NextEnergy Solar secures new debt funding