27 September 2016
BLUEFIELD SOLAR INCOME FUND LIMITED
(the "Company")
Agreement of terms on long term financing and trading update
Bluefield Solar Income Fund Limited (LON: BSIF) (the "Company") is pleased to announce the financial close of a £187 million long-term debt facility (the "Long-Term Facility") and a £30 million short-term revolving credit facility (the "RCF"). The facilities will fully refinance the short-term £200 million amended and restated facility agreement with The Royal Bank of Scotland plc ("RBS") and Investec Bank plc ("Investec"), 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 the Company's regulated revenues. The Long-Term Facility is held by the Company's wholly-owned subsidiary, Bluefield SIF Investments Ltd (the "Borrower"), which maximises transparency, offers improved portfolio management flexibility and reduces costs compared to using project-level debt.
Aviva Investors Long-Term Facility
Loan |
Amount |
Tenor |
Amortisation/ Bullet |
All in cost |
Interest rate exposure during 18-year tenor |
Bullet repayment exposure during 18-year tenor |
Inflation-linkage |
Fixed |
£125 million |
18 years and 3 months |
Fully amortising over 18 years |
287.5bps |
Zero |
Zero |
N/A |
Index-Linked |
£62 million |
18 years and 3 months |
Fully amortising over 18 years |
70bps |
Zero |
Zero |
Retail Price Index |
As per the Company'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 amortising 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 the Company and Borrower. Burgess Salmon LLP advised the Borrower 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, the Company 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 amortising long-term facility with Bayerische Landesbank. If fully utilised, 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 utilisation 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. The RCF is also held by the Borrower. Both the RCF and the Long-Term Facility are secured upon a selection of the Company's investment portfolio. If fully utilised, 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.
Comment
John Rennocks, the Chairman of the Company, said, "This is an important milestone in the development of the Company. Over the past three years the Company has patiently built its portfolio with a focus on being able to introduce the right type of financing at the right time. The timing has been favourable and has enabled the Company to be able to strike the highly attractive all-in fixed rate of 287.5bps and indexed rate of 70bps. Moreover, in Aviva Investors, we have found a financing partner who has worked with the Company's Investment Adviser to design a facility that supports, as opposed to restricts, the Company's investment strategy and aspirations. We are delighted that the facility enables the Company to introduce an appropriate, if still cautious, leverage level at historically low rates with supportive terms and with the protection of a debt service cover ratio of close to 3 times earnings."
Elizabeth Lutley, Director, Infrastructure Debt at Aviva Investors, said, "Aviva is delighted to be able to support Bluefield with the provision of long term financing to this landmark transaction. The strong, well-performing portfolio which Bluefield has compiled to date and the investment strategy of the Company are highly complementary to Aviva Investors long term investment policy and we look forward to supporting Bluefield in their future endeavours."
Ian Stocker, Head of Infrastructure and Renewable Funds at RBS, said, "RBS has supported Bluefield Solar Income Fund Limited since the Company's launch. This refinance is a result of the Company's strong growth and impressive performance over the last 3 years. Our role in this refinance has been an exciting milestone in the relationship and we look forward to supporting the Company's future growth."
Matt Dobbs, of Investec, Power and Infrastructure Finance, said, "Investec is delighted to have supported Bluefield in achieving this important milestone. The terms of the new financing provide an attractive balance of pricing and flexibility, helping with the Company's growth. We look forward to further supporting Bluefield's ambitions through Investec's Advisory capabilities and global distribution network."
This announcement contains inside information.
Enquiries:
James Armstrong / Mike Rand / Giovanni Terranova
Bluefield Partners LLP - Company Investment Adviser
Tel: +44 (0)20 7078 0020
Tod Davis / David Benda
Numis Securities Limited - Company Broker
Tel: +44 (0)20 7260 1000
Kevin Smith
Heritage International Fund Managers Limited - Company Secretary & Administrator
Tel: +44 (0)1481 716000
Tom Karim
CNC
Tel: +44(0)20 3219 8820 / +44(0)7923 293 399
Note to editors
About Bluefield Solar Income Fund Limited
The Company is a Guernsey-registered investment company focusing on large scale agricultural and industrial solar assets. It had an initial public offering of shares on the main market of the London Stock Exchange in July 2013. The Company currently has over 309 million shares in issue.
BSIF seeks to provide shareholders with an attractive return, principally in the form of income distributions, by investing in a diversified portfolio of solar energy assets, each located within the UK, with a focus on utility scale assets and portfolios on greenfield, industrial and/or commercial sites. The Company intends to pay quarterly distributions.
About Bluefield Partners LLP (Bluefield)
Bluefield was established in 2009 and is an investment adviser to companies and funds investing in solar energy infrastructure. It has a proven record in the selection, acquisition and supervision of large scale energy and infrastructure assets in the UK and Europe. The team has been involved in over £1.25 billion of solar PV funds and/or transactions in both the UK and Europe since 2008, including over £500m in the UK since December 2011.
Bluefield has led the acquisitions, and currently advises on over 70 UK based solar PV assets that are agriculturally, commercially or industrially situated. Based in its London office, Bluefield's partners are supported by a dedicated and highly experienced team of investment, legal and portfolio executives.
Bluefield was appointed Investment Adviser to the Company in June 2013.
