Innergex Announces the Completion of CAN$912.6 Million Green Bonds in Chile
- Issuance of equivalent CAN$912.6 million non-recourse green bonds and equivalent CAN$119.7 million letter of credit facility for its Chilean portfolio of assets
- Optimizes capital structure and returns for Innergex’s Chilean operations by adding debt to previously unencumbered assets
- Unlocks equivalent CAN$40.7 million of cash trapped in reserve accounts and benefits from a pre-hedging strategy providing an additional equivalent CAN$71.9 million of cash to Innergex
- Enhances initial cash on cash yield by incorporating a 3-year interest-only period and extending debt maturity
- Provides capital for the construction of Innergex’s first battery energy storage project in Chile, where construction activities have recently commenced
- Represents Latin America’s largest private placement deal in recent history
- Portfolio received an investment grade rating
LONGUEUIL, Quebec, August 5, 2022 – Innergex Renewable Energy Inc. (TSX: INE) (“Innergex” or the “Corporation”) announces the successful completion of a US$803.1 million (CAN$1.032 billion) refinancing of the non-recourse debt of its portfolio of wholly owned assets in Chile with the issuance of US$710.0 million (CAN$912.6 million) green bonds maturing in 2036 (with a balloon payment of US$139.0 million ((CAN$178.7 million)) and a US$93.1 million (CAN$119.7 million) letter of credit facility. A core group of global institutional investors participated in the transaction, which saw strong demand and was significantly oversubscribed.
“The positive reception from investors is a reflection of Innergex’s financial strength and growth prospects in Chile,” said Michel Letellier, President and Chief Executive Officer of Innergex. “Our team was able to secure more favourable terms on our refinancing allowing for additional financial flexibility and extending the average maturity. This refinancing allows us to unlock our portfolio value, optimize our capital structure and align with our growing business as we continue to focus on delivering long-term returns to shareholders.”
The portfolio being refinanced is composed of a combination of solar, wind and hydro assets as well as battery energy storage systems (“BESS’’) assets wholly owned by Innergex. Included in the portfolio are the San Andrés solar farm (50.6 MW) and the three Aela wind farms (332 MW), both acquired earlier this year, as well as the Licán hydro facility (18 MW), Mampil hydro facility (55 MW), Peuchén hydro facility (85 MW), and Salvador solar facility (68 MW) together with a 50 MW/250 MWh BESS project currently under construction. Innergex also owns a 55% interest in Pampa Elvira solar thermal facility (34 MW) and a 69.5% interest in Guayacán hydro facility (12 MW), which were not incorporated in the portfolio being financed. In May 2022, Innergex announced that two new utility-scale battery energy storage projects, totalling 85 MW/425 MWh (5 hours per project), are currently under development in Chile.
Overall, the Chilean portfolio of assets received an investment grade rating, and the green bonds were priced at competitive levels in the United States Treasury (“UST”). The refinancing process will allow Innergex to unlock US$31.7 million (CAN$40.7 million) of cash at closing and benefit from a pre-hedging strategy providing an additional US$55.8 million (CAN$71.9 million) in cash proceeds.
The net proceeds will be used to finance US$176.2 million (CAN$226.5 million) of the acquisition of Aela wind farms, while US$72.6 million (CAN$93.3 million) will be used to finance all development activities for the Salvador energy storage project. The remaining balance will be used to repay US$548.7 million (CAN$705.3 million) of the existing debt and other transaction costs.
The issuance of green bonds is related to the forward start interest rate swaps entered into on February 17, 2022 with an aggregate notional amount of US$331.2 million (CAN$425.8 million) in order to manage its exposure to the risk of increasing interest rates on a portion of the expected refinancing of the acquisition of Aela wind farms and the existing Chilean projects. On July 25, 2022, the interest rate swaps previously entered into were settled in favour of Innergex, for US$41.2 million (CAN$53.1 million). Moreover, the unwind of interest rate swaps related to the current financings will provide an additional US$14.6 million (CAN$18.8 million) of cash.
SMBC and CIBC World Markets Corp acted as placement agent (books) and co-agent respectively for this transaction. SMBC also acted as Financial Advisor to Innergex in respect of the structuring of the transaction, as Sole Green Bond Coordinator, and as sole issuing bank of the letter of credit facility.
The green bonds described above were offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the «Act»). Accordingly, the securities may not be offered or sold in a public offering, since the Act exempts from registration only transactions by an issuer not involving any public offering.
About Innergex Renewable Energy Inc.
For over 30 years, Innergex has believed in a world where abundant renewable energy promotes healthier communities and creates shared prosperity. As an independent renewable power producer which develops, acquires, owns and operates hydroelectric facilities, wind farms, solar farms and energy storage facilities, Innergex is convinced that generating power from renewable sources will lead the way to a better world. Innergex conducts operations in Canada, the United States, France and Chile and manages a large portfolio of high-quality assets currently consisting of interests in 84 operating facilities with an aggregate net installed capacity of 3,484 MW (gross 4,184 MW) and an energy storage capacity of 159 MWh, including 40 hydroelectric facilities, 35 wind farms, 8 solar farms and 1 battery energy storage facility. Innergex also holds interests in 13 projects under development with a net installed capacity of 731 MW (gross 768 MW) and an energy storage capacity of 745 MWh, 3 of which are under construction, as well as prospective projects at different stages of development with an aggregate gross installed capacity totaling 7,495 MW. Its approach to building shareholder value is to generate sustainable cash flows, provide an attractive risk adjusted return on invested capital and to distribute a stable dividend.
Cautionary Statement Regarding Forward-Looking Information
To inform readers of the Corporation’s future prospects, this press release contains forward-looking information within the meaning of applicable securities laws (“Forward-Looking Information”), including the use of proceeds of the green bonds and the letter of credit facility, the Corporation’s successful development, construction and financing (including tax equity funding) of the projects under construction and the advanced-stage prospective projects, sources and impact of funding, plans and strategic priorities, and other statements that are not historical facts. Forward-Looking Information can generally be identified by the use of words such as “approximately”, “may”, “will”, «could”, “believes”, “expects”, “intends”, «should”, «would”, “plans”, “potential”, «project”, “anticipates”, “estimates”, “scheduled” or “forecasts”, or other comparable terms that state that certain events will or will not occur. It represents the projections and expectations of the Corporation relating to future events or results as of the date of this press release.
Forward-Looking Information includes future-oriented financial information or financial outlook within the meaning of securities laws, including information regarding the Corporation’s targeted Adjusted EBITDA and targeted Adjusted EBITDA Proportionate, targeted Free Cash Flow, targeted Free Cash Flow per Share and other statements that are not historical facts. Such information is intended to inform readers of the potential financial impact of expected results, of the expected commissioning of Development Projects, of the potential financial impact of completed and future acquisitions and of the Corporation’s ability to sustain current dividends and to fund its growth. Such information may not be appropriate for other purposes.
Forward-Looking Information is based on certain key assumptions made by the Corporation, including, without restriction, those concerning hydrology, wind regimes and solar irradiation; performance of operating facilities, acquisitions and commissioned projects; project performance; availability of capital resources and timely performance by third parties of contractual obligations; favourable market conditions for share issuance to support growth financing; favourable economic and financial market conditions; the Corporation’s success in developing and constructing new facilities; successful renewal of PPAs; sufficient human resources to deliver service and execute the capital plan; no significant event occurring outside the ordinary course of business such as a natural disaster, pandemic or other calamity; continued maintenance of information technology infrastructure and no material breach of cybersecurity. Please refer to Section 1 – Highlight of the Management’s Discussion and Analysis for the three- and six-month period ended June 30, 2022 for details regarding the assumptions used with respect to the 2022 growth targets and to Section 5 – Outlook of the Annual Report for the 2020-2025 Strategic Plan outlook.
For more information on the risks and uncertainties that may cause actual results or performance to be materially different from those expressed, implied or presented by the forward-looking information or on the principal assumptions used to derive this information, please refer to the «Forward-Looking Information» section of the Management’s Discussion and Analysis for the three-and six-month periods ended June 30, 2022.
Chief Financial Officer
450 928-2550, ext. 1252
Senior Director – Communications
450 928-2550, ext. 1222