European Offshore Wind Deal of the Year 2013: Butendiek
The financing for wpds 288MW Butendiek offshore wind farm nearly went off the rails after several municipal utilities walked away from the project, which created a small but still dangerous shortfall in its equity requirement. Butendiek was the first major offshore project to close in nearly 18 months in Germany, meaning that appetite among banks was expected to be high. But wpds strength and experience as a developer, as well as its ability to take the initiative in overcoming the funding gap, were vital in closing a deal that could have stalled indefinitely.
| OWP Butendiek GmbH & Co. KG |
| STATUS |
| Signed 7 February 2013, closed 12 July 2013 |
| SIZE |
| 1.418 billion |
| DESCRIPTION |
| Financing for the construction of a 288MW wind farm in the German North Sea |
| SPONSORS |
| wpd (10%), Industriens Pension (22.5%), PKA (22.5%), Siemens Project Ventures (22.5%), Marguerite Fund (22.5%) |
| MANDATED LEAD ARRANGERS |
| BayernLB, Bremer Landesbank (account bank), Helaba, HSH Nordbank, ING-DiBa, KfW IPEX (facility agent, security agent, syndication agent), Rabobank, SEB, UniCredit (documentation agent, syndication agent, hedging co-coordinator) |
| OTHER LENDERS |
| European Investment Bank, EKF |
| SPONSORS LEGAL ADVISER |
| Linklaters |
| LENDERS LEGAL ADVISER |
| Norton Rose |
| EIBS LEGAL ADVISER |
| Ashurst |
| EKFS LEGAL ADVISER |
| Kromann Reumert |
| SPONSORS INSURANCE ADVISER |
| Willis |
| SPONSORS TAX ADVISER |
| Ernst & Young |
| SPONSORS MARKET CONSULTANT |
| SGS |
| LENDERS TECHNICAL ADVISER |
| Sgurr |
| LENDERS INSURANCE ADVISER |
| Benatar |
| TURBINE SUPPLIER |
| Siemens |
| OTHER EQUIPMENT SUPPLIERS |
| Ballast Nedam, Visser & Smit, Fabricom, Lemants, CG Holdings Belgium, GeoSea |
| O+M CONTRACTOR |
| Siemens |
The initial mandated lead arrangers, KfW IPEX and UniCredit, along with Bremer Landesbank as additional mandated lead arranger, were long-standing wpd relationship banks. They approached the wider bank market in December 2012 and were able to pull in commitments quickly, before signing the documentation in February 2013.
The same club of banks that closed the deal, with the exception of BayernLB, had already received credit approval before the deal fell apart the year before, which helped the new sponsors close the debt financing quickly. The financing structure was largely unaltered, although the deals gearing increased slightly, because the European Investment Bank (EIB) is taking on additional uncovered project risk.
The 1.023 billion ($1.4 billion) in senior debt closed in July and had a tenor of 14 years on its long-term facilities. The EIB is providing a 150 million loan and a 300 million loan, counter-guaranteed by EKF. This supplements 487 million in long-term debt, split between a 404.5 million term loan and 86 million contingent loan, from nine commercial banks and KfW Bank Gruppe, lending under its special offshore programme.
The nine commercial bank lenders are are BayernLB, Bremer Landesbank, Helaba, HSH Nordbank, ING-DiBa, KfW IPEX, Rabobank, SEB and UniCredit. Pricing for the commercial loan has not been confirmed by the sponsors, but is rumoured to be around 325bp over Euribor.
The banks are also providing a 25 million VAT facility, a 41 million letter of credit facility and a 20 million commissioning letter of credit facility. The financing is then rounded off with 395 million in equity and contingent equity from the sponsors, with wpd holding a 10% residual stake in the project at close and the four others owning 22.5% each.
Butendieks lenders could draw comfort from a new law passed shortly before signing, which allowed developers to claim liquidated damages of 90% of P90 projections in the event that a project did not receive a grid connection.
A week before the deal was set to close Germanys federal environment minister, Peter Altmaier, suggested that Germany might look at temporary retroactive changes to the feed-in tariff. The comments almost derailed the financing again, though by March 2013, Germanys federal government confirmed that no retroactive changes would happen.
Both wpd and the Marguerite Fund have already sold down part of their stakes, to Elektrizitaetswerk der Stadt Zuerich (EWZ) and Caisse des Depots et Consignations, respectively. The sale to the Swiss municipal utility suggests that the German municipals should give Butendiek a second look.
Request a Demo
Interested in IJGlobal? Request a demo to discuss a trial with a member of our team. Talk to the team to explore the value of our asset and transaction databases, our market-leading news, league tables and much more.