A month before launching its Initial public offering, UK renewables developer Infinis refinanced a portfolio of 16 onshore wind farms in the UK, 14 of them subject to existing debt. Infinis closed out ten existing facilities and the associated interest swaps from nine lenders. The developer, which at the time the IPO closed was wholly owned by Terra Firma portfolio, closed a single new senior debt facility of £296 million ($490 million), which reduced both interest expense and complexity.

Infinis Wind Holdings Limited

STATUS

Financial close 10 October 2013

DESCRIPTION

Refinancing of a 274MW UK onshore wind portfolio.

SIZE

£329 million

SPONSOR

Terra Firma

MANDATED LEAD ARRANGERS

NAB (structuring bank), RBS, Santander

BORROWER ’S LEGAL ADVISER

Ashurst

LENDERS’ LEGAL ADVISER

Norton Rose Fulbright

TECHNICAL ADVISER

Garrad Hassan

INSURANCE ADVISER

Marsh

MODEL BUILD

Climate Change Capital

MODEL AUDIT

Mazars

FINANCIAL FORECASTING CONSULTANT

Poyry

“Completing the financing was key, due to the parent company’s IPO, which completed on 20 November,” says Will Cooper, group treasurer and head of financial planning and analysis at Infinis. The IPO involved the sale of 30% of Infinis, and brought in £234 million in proceeds for Terra Firma.

Infinis operates a portfolio of onshore wind, landfill gas and hydro plants in the UK. Its total installed capacity is 621MW. Project Cumulus, the name for the exercise, involved the refinancing of a number of smaller financings on operational wind farms.

“The 16 wind farms have multiple landlords and a structure involving negotiations with landlords would have been costly and time consuming,” Cooper added. The wind farms, predominantly in England and Scotland, have a total capacity of 274MW, and two have capacities in excess of 50MW. The oldest parts of the portfolio date to 2004, originally through acquisitions, and later through construction. Tenors on the previous ten facilities had varied and some were in the range of 10 to 15 years.

National Australia Bank structured and led the financing, and Royal Bank of Scotland and Santander joined it as mandated lead arrangers and lenders. National Australia Bank took the largest ticket, whilst the other banks have broadly equal participations. After financial close they syndicated a portion down to Siemens Financial Services, which participated in a previous facility for three of the wind farms, in England and Northern Ireland, and was looking to come in again.

The new debt priced competitively at 210bp over Libor. The facility has an amortisation profile of over 18 years and a bullet repayment after 7 years. The banks also provided a £5 million revolving credit facility and a £10 million debt service reserve facility. National Australia Bank and RBS, provided an £18 million letter of credit. These ancillary facilities have bullet repayment after seven years.

The UK renewables market underwent considerable regulatory change in 2013. In June, the Department for Energy and Climate Change (DECC) published draft contract for difference (CfD) strike prices for the 2017 Electricity Market Reform. However, Infinis’ Cumulus portfolio would not be affected by the changes, as its assets are already operational. They benefit from the renewables obligation certificate regime, which guarantees that they will receive those certificates for 20 years post-commissioning.

Of the wind farms, 15 benefit from 1 ROC per MWh whilst one will receive 0.9 ROCs per MWh. The 10% reduction in support was introduced in April 2013, because the DECC projected reductions in the costs associated with onshore wind technology.

In 2013 the average value of 1 ROC was about £43 per MWh, almost half of projects’ total revenue per MWh. The revenues for onshore wind farms include wholesale revenues, and government support from both ROCs and CCL exemption certificates (worth £5.24 per MWh from April 2013).

In 2013 Infinis constructed 52.5MW of installed onshore wind capacity and already has consents for a further 100MW of capacity. Infinis plans to build between 130MW and 150MW of UK onshore wind over the next three years, out of a potential 600MW onshore wind pipeline. Infinis will hope to apply simpler structures on future financings by leaning on relationship lenders to obtain competitive terms.