Absa Bank, a major financier in South Africa’s renewable energy program, and Globeleq, the leading independent power company in Africa, have completed the senior debt refinancing of three of Globeleq’s renewable power plants- 138 MW Jeffreys Bay Wind Farm, and the 50 MW De Aar Solar and the 50 MW Droogfontein Solar plants.
To ensure the success of this operation to buy back the debts contracted by the British company for the construction of its power plants, Absa acted as mandated principal arranger and sole underwriter of the debt financing package of ZAR 5.2 billion (nearly $ 351 million).
According to the statement released by Globeleq, the debt buyback of its three renewable power plants will help improve the capital structure of the projects, thus releasing value for shareholders, as well as reducing tariffs for the national company of Eskom electricity and, ultimately, for South African consumers.
In addition to cutting back on wholesale electricity prices, the refinancing will unlock funds for shareholders, encouraging reinvestment in the sector.
It will also serve to speed up equity distributions to the three shareholders of the community trust, thereby allowing spend on high impact, sustainable projects,
The transaction will be the second refinancing of renewable assets under the Independent Power Producer Office (IPPO) Refinancing Protocol. With this trajectory, Globeleq hopes to eventually refinance the entire portfolio of its assets in South Africa.
The company actively pursued this initiative in June 2020 after the IPPO requested that independent power producers (IPP) who have obtained concessions within the framework of the first tender window of the Independent Renewable Energy Producer Supply Program (REIPPP), consider participating in a voluntary refinancing program.
According to the company’s CEO, Mike Scholey, said, “Globeleq sees this transaction as enabling future secondary market debt, which in turn will stimulate new opportunities, jobs and contribute to the economic development of South Africa. We hope that other IPPs will look to do the same and reduce the cost of their power to Eskom.”
Absa’s Johan Koorts, Resource & Project Finance Principal said “Absa Bank has been a major supporter of the South African renewable energy program since its inception and has to the date arranged financing for c. 3 gigawatts of projects across various bid windows.
This transaction strongly demonstrates Absa’s ongoing commitment to the financing of clean energy and the acceleration of investments that make a sustainable impact on the communities we serve.”
Bernard Magoro, Head of the IPP Office said, “We wish to thank all parties for the commitment shown and the constructive way in which they approached this refinancing and hope that the successful conclusion thereof will lead to more IPPs taking comfort from the process and coming to the fore to participate in this initiative. The IPPO is proud to be part of this achievement.”
