Globeleq secures US$362mn renewables debt refinancing in South Africa
Globeleq, an independent power producer (IPP), has announced that it has completed the senior debt refinancing of three of its renewable energy plants in South Africa totaling 238 MW.
The power producer said it has secured a debt financing package of ZAR 5.2bn (US$ 362m) for which Absa Bank, part of financial services group Absa Group Ltd, served as the mandated lead arranger and sole underwriter.
The transaction represents the second refinancing of renewable assets under the Department of Mineral Resources and Energy’s (DMRE) Independent Power Producer Office (IPPO) Refinancing Protocol.
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Globeleq proactively engaged in June 2020 after the IPPO requested owners of the South African renewable Round 1-3.5 projects to consider participating in a voluntary refinancing program and led the refinancing process on behalf of all its shareholders in the 138 MW Jeffreys Bay Wind Farm, 50 MW De Aar Solar and 50 MW Droogfontein Solar plants.
The move will enhance the projects’ capital structures, leading to a reduction of the tariff to national utility Eskom and this particular transaction will result in savings of more than ZAR 1 billion (US$67.5mn) for Eskom across the three assets over the remaining 12-year term of their power purchase agreements (PPAs), Globeleq estimates.
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“Globeleq sees this transaction as enabling future secondary market debt, which in turn will stimulate new opportunities, jobs and contribute to the economic development of South Africa. We hope that other IPPs will look to do the same and reduce the cost of their power to Eskom,” said Mike Scholey, Globeleq’s CEO.
Apart from reducing wholesale electricity prices, the refinancing will unlock funds for the shareholders which, in turn, will encourage re-investment in the sector as well as accelerate equity distributions to the three community trust shareholders, enabling spend on high impact sustainable ventures.
Absa’s Johan Koorts, Resource & Project Finance Principal said: “Absa Bank has been a major supporter of the South African renewable energy program since its inception and has to date arranged financing for c. 3 gigawatts of projects across various bid windows. This transaction strongly demonstrates Absa’s ongoing commitment to the financing of clean energy and the acceleration of investments that make a sustainable impact on the communities we serve.”
On his part, Bernard Magoro, Head of the IPP Office said: “We wish to thank all parties for the commitment shown and the constructive way in which they approached this refinancing and hope that the successful conclusion thereof will lead to more IPPs taking comfort from the process and coming to the fore to participate in this initiative. The IPPO is proud to be part of this achievement.”
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