Hazel Renewable Energy VCT 1 and VCT 2 Refinance Portfolio Companies
Hazel Renewable Energy VCT1 plc and Hazel Renewable Energy VCT2 plc (‘VCTs’) completed a refinancing of UK solar generation assets on 2 March 2016 in the form of Senior Secured RPI-linked bilateral loans. The assets in question, totalling 11.4MW of capacity are owned by the portfolio companies, AEE Renewables UK 13 Limited, Priory Farm Solar Farm Limited, Hewas Solar Limited and St Columb Solar Limited (‘Borrowers’), and include ground- mounted solar projects remunerated under the ROC-regime and residential solar assets remunerated under the UK Feed-in-Tariff regime.
The Lender is HSBC Bank Pension Scheme UK Limited whose funds are managed by Hastings Fund Management Limited. Total funds raised were £13.59 million, and the interest rate has been set at 250bps above the UK index-linked gilt maturing in 2024, plus RPI, yielding an initial interest rate of 154bps plus RPI. The term ranges from 15.5 years to 18.5 years. As a result of this transaction, over 93% VCTs’ solar portfolio is now refinanced, and the VCTs now own 100% of all the underlying share capital. It is envisaged that a portion of the proceeds will be used to fund incremental investments, in line with the VCTs’ investment policy, that are expected to generate a significantly higher return than the cost of debt. The remainder is expected to be used as liquidity for additional dividend growth and share buybacks.
The transaction was led by Bozkurt Aydinoglu, Partner of Hazel Capital LLP, the Investment Adviser.