Foresight Solar Fund announces new acquisition long-term financing facility

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Foresight Solar Fund announces new acquisition long-term financing facility

Foresight Solar Fund Limited has recently announced that it has reached financial close on a £160 million (US$200 million) long-term debt facility. This facility will wholly refinance the company's £150 million (US$187 million) short-term acquisition facility currently in place.  

The long-term facility will be provided by Macquarie Infrastructure Debt Investment Solutions (MIDIS) and Abbey National Treasury Services (Santander) as follows:

  • £63 million fixed-rated tranche with a tenor of 18 years
  • £63 million inflation-linked tranche with a tenor of 18 years
  • £34 million term loan tranche with a tenor of 8 years

The term loan tranche is priced over the London Interbank Offered Rate (LIBOR), the average of interest rates estimated by each of the leading banks in London that it would be charged were it to borrow from other banks, and it will benefit from an interest rate swap. The expected average interest cost of debt at financial close is 2.59%.

Following financial close, the company's total outstanding long term debt is approximately 36% of gross asset value (GAV), if measured against assets as at 31 December 2015. 

In addition, the company has entered into £40 million (US$50 million) short-term (3 years) revolving acquisition facility with Santander at favorable terms. The short-term facility will provide the company with the flexibility to take advantage of future pipeline opportunities.

The company has also finalized an agreement with a single provider to enter into a 5-year power purchase agreement (PPA) for 15 of the 16 assets in the portfolio following a wide portfolio tender process.

It is intended that an advisory fee will be paid to Foresight Group CI Limited (Foresight Group) at financial close. Due to the complex nature of the refinancing, the Board instructed Foresight Group to undertake the transaction given their past project finance experience, most notably the issue of a listed index-linked solar bond to refinance an existing UK solar portfolio in 2013.  

Alex Ohlsson, Foresight Group Chairman, said:

"Given the current favorable market conditions, we believe the facility has been secured at an attractive rate, optimizing the capital structure of the Fund and further underpinning returns to investors."

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