International Public Partnerships Limited (LON: INPP), the listed infrastructure investment company, has successfully completed an innovative refinancing and restructuring of its offshore transmission (‘OFTO’) portfolio.
The Company has repaid the original bank debt secured against the original three OFTOs it invested into – being the Barrow, Gunfleet Sands and Robin Rigg OFTOs. The transaction takes advantage of current favourable conditions in the debt markets and further de-risks the portfolio by reducing financial leverage on these investments by c.50% (compared to the level at financial close). This has been achieved through a combination of a new long-term bank debt and an additional c.£70m senior debt investment made by the Company.
The combination of the low cost of the new bank debt, together with the ability to release certain reserves and achieve other efficiencies following the repayment of the existing bank debt, allows the new senior debt investment made by the Company to be attractively priced and generate returns accretive to the Company’s portfolio. At the same time the transaction provides the Company with additional financial and operational flexibility notably by retaining the ability to re-gear in the future.
The commercial terms of the new bank debt are significantly more attractive than the terms of the original loans as a consequence of favourable current market conditions, the debt market’s familiarity with the sector and the strong historic performance of the Company’s OFTO portfolio.
The Barrow, Gunfleet Sands and Robin Rigg OFTOs were the first three of any OFTOs to be invested into and were the result of the Company’s early anticipation of the development of this attractive sub-class of infrastructure. The terms of the third-party debt originally secured against these first three OFTOs reflected the then immaturity of the asset class. Performance of the assets has been strong since their original acquisition, with availability levels significantly in excess of Ofgem’s target.
In total, the Company owns seven of the seventeen UK OFTOs which have reached financial close. The Company’s OFTO portfolio connects 1.5GW of renewable energy to the UK’s grid, which is sufficient to power 1.3 million UK homes. In August, the Company was appointed preferred bidder for Rampion OFTO, which will be the eighth OFTO in the portfolio once it reaches financial close.
Following the recent capital raise conducted in September 2019, International Public Partnership Ltd’s £400 million revolving credit facility is currently drawn by £102.9 million. This means the Company is well positioned to support its diverse pipeline of high-quality assets across all markets in which INPP invests.
