London-listed investment firm Aquila European Renewables (AER) has finalized a €50 million, five-year non-recourse debt facility with ING Bank N V Sucursal en España. The debt facility is backed by AER's wholly owned Spanish solar PV portfolio, comprising 180MWp of unlevered operating assets with long-term contracted Power Purchase Agreements (PPAs).
The financing arrangement maintains a conservative gearing level of approximately 26% for AER's Spanish solar PV assets, based on fair values as of September 30, 2023. AER emphasized that it secured the loan on favorable terms, featuring an all-in interest rate below the existing revolving credit facility (RCF). While specific pricing details remain confidential, 90% of the package is hedged via an interest rate swap throughout the loan's duration.
The debt facility includes partial amortization, with a balloon repayment at maturity, an accordion option (€18 million), and two twelve-month extension options subject to lender approval. AER intends to utilize the net proceeds to repay the RCF, freeing up approximately €70 million under the RCF (current facility limit: €100 million).
This move maintains AER's overall gearing level at about 34% of its gross asset value as of September 30, 2023. The undrawn RCF capacity offers flexibility for future capital allocation decisions, potentially including the continuation of the share buyback program.
The debt financing aligns with initiatives outlined by the Board in May 2023 to underscore the intrinsic value of the portfolio. AER's Board continues to engage with shareholders, exploring broader options for the company's future, as announced on December 22, 2023.
Ian Nolan, Chairman of AER, expressed satisfaction with securing the debt financing on attractive terms and highlighted ongoing efforts to assess the optimal allocation of incremental capital for the benefit of shareholders.