Aquila European Renewables (AER), the London-listed investment company advised by Aquila Capital Investmentgesellschaft, has entered into a €50m, five-year non-recourse debt facility with ING Bank N V Sucursal en España.
The debt facility is secured by AER’s wholly owned Spanish solar PV portfolio, which consists of 180MWp of unlevered operating assets supported by long-term contracted PPAs.
AER said that the debt facility implies a conservative gearing level of approximately 26% for the Spanish solar PV portfolio, based on fair values as at 30 September 2023.
The company added that it had been able to secure the loan at attractive terms, with an all-in interest rate below the existing revolving credit facility (RCF).
Pricing terms of the debt facility remain confidential but 90% of the package is hedged via an interest rate swap over the life of the loan.
The debt facility is also partially amortising, with a balloon repayment at maturity, and also benefits from an accordion option (€18m), as well as two twelve-month extension options, both of which are subject to lender consent.
AER intends to use the net proceeds from the debt facility to repay the RCF, resulting in available capacity under the RCF of approximately €70m (current facility limit: €100m).
As a result, the company’s overall gearing level remains unchanged at approximately 34% of its gross asset value, as at 30 September 2023.
The undrawn RCF capacity provides significant flexibility for the company going forward when considering future capital allocation decisions, which may include the continuation of the share buyback programme.
As announced in May 2023, the debt financing is one of a number of initiatives identified by the Board to assist in securing recognition of the value inherent in the portfolio.
Further, the board will continue to consult with shareholders and, as announced on 22 December 2023, is considering broader options for the future of the company.
Ian Nolan, chairman of AER, said: “We are pleased to have secured the debt financing at such attractive terms, fulfilling one of the key initiatives announced in May 2023 prior to the company’s inaugural continuation vote.
“We are working with our advisers to evaluate how the incremental capital can be most appropriately allocated for the benefit of shareholders.”