Drax Group has agreed a £75 million (US$114 million) amortizing loan facility maturing in June 2018 with Friends Life, underpinned by a guarantee from HM Treasury issued under the Infrastructure UK Guarantee Scheme.
As anticipated, this loan facility replaces £50 million of the £100 million amortizing loan facility agreed with the UK Green Investment Bank, which was signed in December 2012.
This facility enhances the financing structure executed last year by providing additional liquidity to the Group, securing HM Treasury support for our plans to convert three generating units from coal to biomass and ensuring a smoother profile of debt maturities across the structure. Furthermore, the all-in cost of the new loan facility is very competitive.
Commenting on the new facility, Tony Quinlan, Finance Director of Drax said:
“This further strengthens our balance sheet, as we progress our project to transform the largest coal-fired power station in the UK into an electricity generator fuelled predominantly by sustainable biomass.
“The benefits are multiple, from securing jobs at Drax and across the UK in the supply chain to providing low carbon, cost effective and reliable renewable power for the consumer. We are delighted to secure the support of Friends Life and Infrastructure UK.”
Mark Versey, Chief Investment Officer at Friends Life said:
“We are pleased to work together with Drax and HM Treasury and support the Infrastructure UK Guarantee Scheme as an institutional investor.
“This investment demonstrates Friends Life’s ability to explore infrastructure and other alternative investment opportunities to ensure Friends Life remains competitive and nimble in a changing market.”
The amended funding program now includes the following:
• £190 million (gross) proceeds from an equity placing in October 2012
• £100 million amortizing term loan facility agreed with the Prudential/ M&G UK Companies Financing Fund in July 2012 (note 1)
• £50 million amortizing term loan facility agreed with the UK Green Investment Bank (note 1)
• £75 million amortizing term loan facility agreed with Friends Life, underpinned by a guarantee from HM Treasury
• £400 million revolving credit facility maturing in April 2016 (note 2)