Innergex Renewable Energy Inc. in Canada has completed a $803.1 million (C$1.032 billion) refinancing of the non-recourse debt of its portfolio of wholly owned assets in Chile, with the issuance of $710.0 million (C$912.6 million) in green bonds maturing in 2036 and a $93.1 million (C$119.7 million) letter of credit facility.
The portfolio being refinanced is composed of hydro, wind and solar assets as well as a battery energy storage system. Included in the portfolio are three hydro facilities – 18 MW Licán, 55 MW Mampil and 85 MW Peuchén – as well as the 50.6 MW San Andrés solar farm, three Aela wind farms with total capacity of 332 MW, the 68 MW Salvador solar facility and a 50 MW/250 MWh battery storage project under construction.
A core group of global institutional investors participated in the transaction, which saw strong demand and was significantly oversubscribed, Innergex said. “The positive reception from investors is a reflection of Innergex’s financial strength and growth prospects in Chile,” said Michel Letellier, president and chief executive officer of Innergex. “Our team was able to secure more favorable terms on our refinancing allowing for additional financial flexibility and extending the average maturity. This refinancing allows us to unlock our portfolio value, optimize our capital structure and align with our growing business as we continue to focus on delivering long-term returns to shareholders.”
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Overall, the Chilean portfolio received an investment grade rating, and the green bonds were priced at competitive levels in the United States Treasury. The refinancing process will allow Innergex to unlock $31.7 million (C$40.7 million) of cash at closing and benefit from a pre-hedging strategy providing an additional $55.8 million (C$71.9 million) in cash proceeds. The net proceeds will be used to finance $176.2 million (C$226.5 million) of the acquisition of the Aela wind farms, while $72.6 million (C$93.3 million) will be used to finance all development activities for the Salvador energy storage project. The remaining balance will be used to repay $548.7 million (C$705.3 million) of the existing debt and other transaction costs.
The issuance of green bonds is related to the forward start interest rate swaps entered into on Feb. 17, 2022 with an aggregate notional amount of $331.2 million (C$425.8 million), to manage its exposure to the risk of increasing interest rates on a portion of the expected refinancing of the acquisition of the Aela wind farms and the existing Chilean projects. On July 25, 2022, the interest rate swaps previously entered into were settled in favor of Innergex, for $41.2 million (C$53.1 million). Moreover, the unwind of interest rate swaps related to the current financings will provide an additional $14.6 million (C$18.8 million) of cash.
In Chile, Innergex also owns a 69.5% interest in the 12 MW Guayacán hydro facility and a 55% interest in the 34 MW Pampa Elvira solar thermal facility, which were not incorporated in the portfolio being financed. In May 2022, Innergex announced that two new utility-scale battery energy storage projects, totaling 85 MW/425 MWh (five hours per project), are under development in Chile.
Innergex conducts operations in Canada, the U.S., France and Chile and manages a portfolio of assets consisting of interests in 84 operating facilities with an aggregate net installed capacity of 3,484 MW (gross 4,184 MW) and an energy storage capacity of 159 MWh, including 40 hydroelectric facilities, 35 wind farms, eight solar farms and one battery energy storage facility. Innergex also holds interests in 13 projects under development with a net installed capacity of 731 MW (gross 768 MW) and an energy storage capacity of 745 MWh, as well as prospective projects at different stages of development with an aggregate gross installed capacity totaling 7,495 MW.