Altius Renewable Royalties Announces Closing of $247 Million Credit Facility
All $ references in US unless otherwise stated
ST. JOHN’S, Newfoundland and Labrador--(BUSINESS WIRE)----Altius Renewable Royalties Corporation (“ARR”) (TSX:ARR, OTCQX: ATRWF) is pleased to announce that certain subsidiaries of ARR’s 50% owned Great Bay Renewables joint venture (such subsidiaries are collectively referred to herein as “Great Bay”), have entered into senior secured credit financing agreements in the aggregate amount of $247 million. The financing includes a $123.5 million initial term facility (“ITF”), a $100 million delayed draw term facility (“Delayed Draw Facility”), and a $23 million letter of credit facility (“L/C”), with the two term facilities qualifying for green loan eligibility. Great Bay is jointly controlled by ARR and certain funds managed by affiliates of Apollo Global Management, Inc. (“Apollo”).
MUFG Bank and Natixis Corporate & Investment Banking (“Natixis CIB”) are Coordinating Lead Arrangers, Bookrunners, Syndication Agents and hedge providers with respect to the facilities.
Frank Getman, CEO of Great Bay, commented, “We are pleased to secure this facility, which enables us to accelerate our growth trajectory in the renewable royalty sector while maintaining a competitive cost of capital. This agreement represents another strong endorsement of our business model, and with over $350 million of investment agreements signed to date, positive cash flow, and an approximate 15.0 GW portfolio of development stage royalties, we are well positioned to continue scaling our platform. We are also thankful for the strong support we’ve received from two leading banks, MUFG and Natixis, and look forward to building upon this relationship as we continue to grow the company.”
Key terms of the credit facility are as follows:
- Subject to certain conditions precedent, initial draw of $123.5 million of the ITF to be used for closing costs and return of capital to the shareholders, ARR and Apollo. The joint owners intend to reinvest the debt proceeds back into GBR as future royalty investment opportunities arise.
- Subject to certain conditions precedent, Delayed Draw Facility of $100 million available in tranches for future royalty acquisitions, with the amount available to Great Bay to be determined based on expected revenue parameters, with adjustment factors for merchant vs. contract weighting and renewable energy source. The Delayed Draw Facility will be available for the first 3 years of the term.
- $23 million LC to accommodate debt service reserve requirements and for development stage renewable royalty investment support.
- Initial term of 5 years for the credit facilities.
- Repayments based on expected interest rates based on a 20 year amortization period. Repayable anytime without penalty. Interest payments are expected to be met by existing operating royalty cash flow.
- A pledge of equity and security in the form of first lien on existing cash generating assets or expected near term cash generating assets of Great Bay, along with a pledge of the equity in the subsidiary holdings of its developer investments (including Hodson, Hexagon, Bluestar and Tri Global Energy investments).
- The credit facility agreements contain customary representations and warranties, covenants and events of default (subject to customary grace and cure periods).
In connection with the financing, Great Bay entered into a floating-to-fixed interest rate swap to lock in approximately 100% of the interest rate on the ITF for the full term of the debt. In addition, GBR has entered into a floating to fixed interest rate swap to lock in approximately 50% of the initial draw beyond the initial term for the amortization period to reduce refinancing risk. Great Bay expects the interest rate on the fixed portion of the debt to be approximately 6.4% per annum excluding financing closing costs for the first three years and approximately 6.5% for the last two years of the term of the loan. If required, Great Bay may enter into further interest rate swaps to lock in interest rates in connection with the Delayed Draw Facility.
Use of Proceeds
The borrowing is intended to finance or reimburse investments previously made in Eligible Green Collateral Projects, under the categories of “Renewable Energy Production” and “Green Technologies – Energy Storage Systems”, under the Green Loan Principles administered by the International Capital Market Association.
Great Bay was advised on this transaction by the legal teams at Vinson & Elkins LLP and Pierce Atwood LLP, and the advisory team at Apterra Infrastructure Capital.
About Natixis CIB
Natixis Corporate & Investment Banking is a leading global financial institution that provides advisory, investment banking, financing, corporate banking and capital markets services to corporations, financial institutions, financial sponsors and sovereign and supranational organizations worldwide.
Natixis CIB’s teams of experts in close to 30 countries advise clients on their strategic development, helping them to grow and transform their businesses, and maximize their positive impact. Natixis CIB is committed to aligning its financing portfolio with a carbon neutrality path by 2050 while helping its clients reduce the environmental impact of their business.
As part of the Global Financial Services division of Groupe BPCE, the second largest banking group in France through the Banque Populaire and Caisse d’Epargne retail networks, Natixis CIB benefits from the Group’s financial strength and solid financial ratings (Standard & Poor's: A, Moody's: A1, Fitch Ratings: A+,R&I: A+).
About MUFG and MUFG Americas
Mitsubishi UFJ Financial Group, Inc. (MUFG) is one of the world’s leading financial groups. Headquartered in Tokyo and with over 360 years of history, MUFG has a global network with approximately 2,100 locations in more than 50 countries. MUFG has nearly 160,000 employees and offers services including commercial banking, trust banking, securities, credit cards, consumer finance, asset management, and leasing. The Group aims to “be the world’s most trusted financial group” through close collaboration among our operating companies and flexibly respond to all the financial needs of our customers, serving society, and fostering shared and sustainable growth for a better world. MUFG’s shares trade on the Tokyo, Nagoya, and New York stock exchanges.
MUFG’s Americas operations, including its offices in the U.S., Latin America, and Canada, are primarily organized under MUFG Bank, Ltd. and subsidiaries, and are focused on Global Corporate and Investment Banking, Japanese Corporate Banking, and Global Markets. MUFG is one of the largest foreign banking organizations in the Americas.
ARR is a renewable energy royalty company whose business is to provide long-term, royalty-level investment capital to renewable power developers, operators, and originators. ARR currently has 10 renewable energy royalties representing 2,068 MW of renewable power on operating projects, and an additional approximately 6.0 GW on projects in the construction and development phases, across several regional power pools in the U.S. ARR also expects future royalties from Great Bay’s investments in Bluestar Energy Capital, Hodson Energy and Hexagon Energy which increases the total development project pipeline to approximately 15 GWs. ARR combines industry expertise with innovative, partner-focused solutions to further the growth of the renewable energy sector as it fulfills its critical role in enabling the global energy transition.
This news release contains forward‐looking information. The statements are based on reasonable assumptions and expectations of management and ARR provides no assurance that actual events will meet management's expectations. In certain cases, forward‐looking information may be identified by such terms as "anticipates", "believes", "could", "estimates", "expects", "may", "shall", "will", or "would". Although ARR believes the expectations expressed in such forward‐looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those projected. Readers should not place undue reliance on forward-looking information. ARR does not undertake to update any forward-looking information contained herein except in accordance with securities regulation.