Enersis: Debt revision

The simultaneous close of Project Spring and Project Martel – the two elements to the Eu985.5 million refinancing by Babcock & Brown (B&B) of its Eu500 million acquisition of the wind and hydro assets of Portuguese renewables operator Enersis – was the largest renewable energy portfolio financing to date.

The deal was a reaction to an inherited portfolio comprising over 80 special purpose vehicles for individual projects with a high degree of cross-ownership between the SPVs and no separation between wind, and hydro companies. Babcock & brown rationalised the portfolio by asset and looked at means of maximising financing.

At the time of B&B's acquisition Enersis had around Eu600 million of project debt outstanding and B&B had borrowed Eu300 million from BES to make the acquisition. B&B concluded that because of the way Enersis had developed there was a lot of senior debt capacity on a portfolio basis that had not been used.

The Martel portfolio comprises 635MW of operational, in construction and licenses for wind farms. The deal achieved an optimised financing on the portfolio of $806 million with an average loan life of 10.5 years. The debt comprised Eu463 million to refinance existing operational debt; Eu277 million to refinance existing construction debt; a Eu25 million working capital facility; a Eu20 million reserve facility; a Eu15 million guarantee facility and a Eu5 million VAT tranche. Pricing was 70bp plus on the first four tranches and 35bp on the last three with a tenor of 18 years.

The leverage achieved on the portfolio refinanced the existing project debt on the 25 windfarms and also repaid the acquisition debt. The deal benefited from PPAs of unlimited tenor and fixed tarrifs for the first 15 years of operation.

The hydro element to the deal – Project Spring – comprised 10 mini-hydro stations and one near end of construction. Total capacity of the portfolio was 89.1 MW and it demonstrated many of the same strengths as the wind deal.

The financing comprised a Eu131 million refinancing of existing operational debt; Eu7 million to refinance construction debt (many of the plants had been operating since 1991 so the remaining debt was small); Eu10 million in working capital; a Eu24 million debt service reserve facility; and a Eu7.5 million guarantee facility. All tranches except for the guarantee (35bp) priced at 70bp with a tenor of 22 years.

Enersis refinancing
Status: Closed 12 October 2006
Description: Refinancing of wind and hydro portfolio
Sponsor: Enersis/Babcock & Brown
Mandated lead arrangers Spring: BPI, BES, Caixa BI, Millennium BCP
Mandated lead arrangers Martel: BBVA, BES, Caixa BI, Millennium BCP
Legal counsel to the borrower: Linklaters
Legal counsel to lenders: Morais leitao, Galvao Teles, Soares da Silva & Associados
Technical consultant: Lahmeyer
Insurance: Marsh