Saturday 25 January 2020

Viridian hopes to raise £405m on markets but with 12pc yield

Donal O'Donovan

Donal O'Donovan

POWER company Viridian's borrowing costs look set to double when it sells bonds this week.

The owner of the Huntstown Power Plant in Dublin could pay lenders a yield of 12pc to tap the bond markets, according to price guidance circulated to potential investors yesterday.

Northern Ireland-based Viridian is looking to raise £405m (€477m) through the bond markets.

The deal is being done in order to ease the company's debt burden by replacing short term loans with the longer term bond debt.

A deal is expected to close this week.

Last night market sources said the "yield" or interest on planned five-year bonds will be between 11.75pc and 12pc.

That is twice the 5.5pc interest that the company currently pays to banks for loans that will fall due later this year.

The bond deal is part of ongoing efforts to deal with Viridian's huge debt burden. It has weighed on the company since it was acquired by Bahraini investor Arcapita in 2007.

Last year Viridian sold its main electricity business to the ESB in a €1.4bn deal.

The cash was not enough to repay all of the debts taken out when the business was bought for €3.2bn however.

Since then lenders including Deutsche Bank, RBS and UBS have already extended the term of their loans in order to allow time to complete a bond deal, in exchange for higher interest charges.

All three are involved in the effort to place the planned bond.

Last week the Irish Independent reported that Viridian's wind-farm assets have been put up for sale. It's reckoned to be worth as much as €200m.

Viridian's main business is Power NI, it also owns Energia, a company that sells power to businesses on both sides of the border.

The company has been involved in ongoing talks with lenders over the past two years aimed at reducing and rescheduling debts. Talks have taken place before and since the ESB sale.

The planned bond deal is reckoned to be the biggest ever for a Northern Ireland company. Viridian is owned by Arcapita, a Bahrain based investment fund that is also seeking to refinance its own loans, according to a report in the 'Financial Times'.

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