Saturday 19 August 2017

ESB taps global banks for €2.5bn

AIB the only Irish-owned bank signing up to help fund takeover of Northern Ireland Electricity

Donal O'Donovan

Donal O'Donovan

THE ESB has tapped a mix of international banks for €2.5bn of new loans, with AIB the only Irish-owned bank lending into the new deal.

The debt will part-fund the £1.03bn (€1.24bn) takeover of Northern Ireland Electricity (NIE).

It will also refinance the ESB's previous €1.2bn revolving credit facilities that had been due to mature in 2012.

The €2.5bn deal is split between an £810m sterling acquisition financing and two euro-denominated revolving credit facilities of €750m each.

One of the revolving credit facilities has a four-year term while the other will remain in place for five years.

Revolving credit facilities are effectively the corporate equivalent of overdraft facilities.

They allow corporations to draw down and pay back any amount of cash up to an agreed maximum at a preset interest rate for a fixed period.

While borrowers have to pay an upfront fee for arranging the debt, the facilities give corporate treasurers certainty over funding for years in advance even if they have no real need of the facilities when the deal is put in place.

The ESB is understood to have attracted a number of new banks to the new debt deal, as well as retaining a majority of lenders to its previous loan. While part of the debt will go to fund the ESB's NIE deal, the loans themselves are guaranteed by the state-owned utility.

AIB and Ulster Bank, which is owned by Royal Bank of Scotland, are the only Irish banks in the lender group.

The rest of the group includes American lenders Bank of America and Citigroup, Spain's BBVA and Santander, Barclays Capital, BNP Paribas, Danske Bank, Deutsche Bank, HSBC Bank, Intesa Sanpaolo, Royal Bank of Canada, Societe Generale and Bank of Tokyo-Mitsubishi.

Irish Independent

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