Bluefield Solar Income Fund Limited has announced the financial close of a £187 million (US$241 million) long-term debt facility and a £30 million (US$39 million) short-term revolving credit facility (RCF).
The facilities will fully refinance the short-term £200 million (US$258 million) amended and restated facility agreement with The Royal Bank of Scotland (RBS) and Investec Bank, which closed on 22 January, 2016.
The long-term facility will be provided by Aviva Investors in two tranches. The first is a £125 million fixed-rate long-term facility and second is £62 million index-linked long-term facility. Both are fully amortising over 18 years, which matches the average remaining life of Bluefield's regulated revenues. The long-term facility is held by the company's wholly-owned subsidiary, Bluefield SIF Investments Ltd, which maximises transparency, offers improved portfolio management flexibility and reduces costs compared to using project-level debt.
As per Bluefield's base model, the debt service cover ratio is 2.8 times earnings. This compares to a typical asset based project finance agreement of 1.20-1.30 times cover. The company has elected to structure its long-term facility as fully amortizing over the 18-year tenor with no short-term or bullet maturity components. This is in order to remove refinancing risk and to take the maximum advantage of the current interest rates. The terms of the long-term facility offer the flexibility that the company requires in rolling out its operational and investment strategies. In addition, the 'all-in' costs are significantly below the Company's previously assumed costs of financing of 450bps used in the valuation for the 31 December, 2015 interim report and unaudited interim financial statements.
The terms were agreed following a competitive and diligent process including extensive negotiations with multiple institutions.
RBS and Investec acted as financing advisers to Bluefield and its subsidiary. Burgess Salmon LLP advised Bluefield SIF Investments and the Investment Adviser on all aspects of the financing. Aviva Investors and RBS were advised by Ashurst LLP.
In addition to the long-term facility, Bluefield has retained the existing, long-term financing agreement for the Durrants' Farm asset, totalling £14m as of 30 June, 2016, to avoid the cost and complexity associated with restructuring this small legacy, project level facility. The asset level borrowing is a fixed rate, fully amortizing long-term facility with Bayerische Landesbank. If fully utilized, the combined amounts drawn under the long-term facility and the Durrants' Farm facility would equal 40% of gross asset value (GAV), based on the unaudited 31 March 2016 net asset value (NAV), assuming no utilization of the RCF and the inclusion of the acquisition valuation of Bluefield Harrier Limited completed in April 2016.
The RCF will be provided by RBS and has a three-year term. Both the RCF and the long-term facility are secured upon a selection of Bluefield's investment portfolio. If fully utilized, the combined amounts drawn under the long-term facility, Durrants' Farm facility and the RCF, assuming full acquisition valuation for any acquired assets, would equal 44% of GAV, based on the unaudited 31 March 2016 NAV.