The refinancing of Acciona’s acquisition of a portfolio of assets from Endesa is more notable for what it leaves out than what it includes. The Eu1.421 billion ($1.874 billion) financing covers a 1,310MW set of hydroelectric and wind assets located in Spain. But it no longer covers 774MW of wind and hydro capacity, much of it operating under a different regime.

In other respects the financing is a reminder of the terms and commitments that a large Spanish corporate can command from lenders. The 18-year loan attracted 12 mandated lead arrangers, each of which put up over $100 million equivalent. Given heightened risk perceptions of the country’s renewables market, the result of Spain’s retroactive cuts to solar photovoltaic feed-in tariffs.

Acciona bought the 2,084MW of capacity from Endesa in 2009, shortly after it exercised a put option to sell a 25.01% stake in Endesa to Enel. The sale brought in total proceeds of Eu9.63 billion and brought to an end an agreement between Acciona and Enel dating back to 2007. The proceeds from the Endesa stake allowed Acciona to pay off Eu8.195 billion in debt related to Endesa, an enormous relief to its shareholders.

But it financed the renewables acquisition with a conservatively structured Eu1.5 billion two-year club bridge loan, priced at 322bp over Libor, from 11 Spanish banks – Banco Popular, Banco Sabadell, Banco Santander, Banesto, BBVA, Caja Asturias, Caja Badajoz, Caja Madrid, Caja Vital, Kutxa and La Caixa, as well as Intesa, Royal Bank of Scotland and Société Générale.

The deal closed in June 2009, and had a total value of Eu2.85 billion. At close, Endesa transferred 1,946.6MW of assets (1,095.5MW of wind and 851.1MW of hydro) with a value of Eu2.653 billion to Acciona. A further 133.7MW of capacity (131.7MW of wind and 2MW of hydro) moved over once completion of construction took place, and was worth Eu195 million.

As the bridge loan creeped towards maturity, the news from the Spanish renewables market did little to inspire investor confidence. On 23 December the Spanish Minister of Industry, Tourism and Trade unveiled retroactive cuts to the feed-in tariffs on offer to solar photovoltaic developers. The move, while permitted under Spanish law, shocked equity investors and lenders, which had become used to cuts to tariffs for prospective projects, but had assumed that existing projects were safe from interference.

The cuts were a reaction to the extreme growth in solar, which enjoyed higher tariffs than wind or small hydro, and rapidly grew to an outsize burden on the Spanish treasury, which met the increased cost directly. The cuts never threatened to spread to other technologies, and while some equity investors have threatened to never look at the sector again, there was never any danger that local or international banks would desert a core corporate client like Acciona over the issue

However, the Spanish bank market has also been in turmoil, as smaller lenders, many of them regional Cajas, buckled under the weight of non-performing property loans. Several have been forcibly merged with stronger peers, and are no longer looking for expansive corporate exposures. The largest Spanish banks, particularly those with Latin American operations, have come through the crisis in reasonable shape, and the second-tier institutions are also healthy enough to maintain market share.

But Acciona asked lenders to stretch themselves, looking for Eu100 million-plus commitments from banks. Royal Bank of Scotland, anxious to maintain a franchise in Spain, but under orders from the UK government to limit its footprint, did not carry over from the 2009 deal, though IMI, the rebranded Intesa, stayed in, offering to commit Eu150 million, and ending on a hold of Eu133.7 million, as did SG.

The regional Cajas – Caja Asturias, Caja Badajoz, Caja Vital, and Kutxa – did not carry over from the bridge. Banco Popular, Banco Sabadell, Banco Santander, Banesto, and BBVA, all stayed in the deal. Joining them were new lenders Credit Agricole, WestLB, and Helaba. The 18-year debt is fully amortising, but has initial pricing of 275bp over 6-month Euribor, stepping up to 350bp over time, some way inside the bridge loan. The sponsor put in place hedges for 75% of the total debt

Crucially, Acciona persuaded lenders to carve out from the 690MW of Spanish hydroelectric capacity, which operates under the country’s ordinary regime, and 93MW of wind capacity in Portugal. The assets operated under less generous or less familiar regimes, but persuading banks to release assets from a portfolio is usually a trickier task. As with many of the winners in 2011, the sponsor benefited from closing its deal in the second quarter of 2011, though it was rushing to meet the June 2011 maturity of the bridge.

The sponsor, according to lending sources close to the process, viewed the portfolio as strategic, and its most important renewables deal of recent years. Given its size, and the way the sponsor locked in permanent financing on such attractive terms, the deal is a European landmark for financing operational assets.

Corporación Acciona Eólica and Acciona Saltos de Agua
STATUS: Closed 7 April 2011
TOTAL PROJECT COST: Eu1.864 billion
DEBT: Eu1.4 billion
DESCRIPTION: Refinancing of 1,306MW wind and hydro portfolio in Spain that sponsor acquired from Endesa
SPONSOR: Acciona Energia
MLAS: BBVA, Banco Santander, La Caixa, Caja Madrid, Societe Generale, Credit Agricole, Banesto, Banca IMI, WestLB, Helaba, Banco Sabadell and Banco Popular
LENDER TECHNICAL ADVISER: Alatec Consultores
LENDER INSURANCE ADVISER: AON
SPONSOR LEGAL COUNSEL: In-house
LENDER LEGAL COUNSEL: Garrigues