Aquila European Renewables (AER), the investment company listed on the London Stock Exchange and advised by Aquila Capital Investmentgesellschaft, has finalized a €50 million non-recourse debt arrangement with ING Bank N.V. Sucursal en España, spanning a duration of five years.
This debt facility is backed by AER’s wholly-owned portfolio of solar photovoltaic assets in Spain, totaling 180MWp, comprising unencumbered operational assets with long-term contracted Power Purchase Agreements (PPAs). AER highlighted that this debt arrangement maintains a prudent gearing level of approximately 26% for the Spanish solar PV portfolio, determined by fair values as of September 30, 2023.
The company secured favorable terms for the loan, featuring an all-in interest rate lower than its existing revolving credit facility (RCF). While specific pricing details are confidential, 90% of the package is hedged through an interest rate swap throughout the loan’s tenure. The debt facility follows a partial amortization structure, including a balloon repayment at maturity. Additionally, it includes an accordion option (€18 million) and two twelve-month extension options, both subject to lender approval.
AER plans to utilize the net proceeds from this debt facility to repay the RCF, resulting in an available capacity under the RCF of approximately €70 million (with the current facility limit set at €100 million). Consequently, the company’s overall gearing level remains consistent at about 34% of its gross asset value, as of September 30, 2023.
The untapped RCF capacity provides significant flexibility for AER in future capital allocation decisions, including the potential continuation of its share buyback program. This debt financing is part of a broader set of initiatives identified by the Board to recognize and enhance the intrinsic value of the portfolio, as disclosed in May 2023. The Board also continues to engage with shareholders and is exploring broader options for the company’s future, as announced on December 22, 2023.
Chairman of AER, Ian Nolan, said “We are pleased to have secured the debt financing at such attractive terms, fulfilling one of the key initiatives announced in May 2023 prior to the company’s inaugural continuation vote. We are working with our advisers to evaluate how the incremental capital can be most appropriately allocated for the benefit of shareholders.”
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