Bluefield Solar (LON: BSIF), a UK focused income fund that invests primarily in solar assets, is pleased to announce that the Company has acquired a UK-based portfolio of 15 operational solar photovoltaic (‘PV’) plants with a total installed capacity of 64.2 megawatt peak (‘MWp’). The Company has also agreed a new £110.0 million, three-year term loan facility with National Westminster Bank plc (‘NatWest’).
Unless otherwise noted herein, the information provided in this announcement and any asset valuations underlying such information is unaudited.
On 20 August 2020, the Company completed the acquisition of the portfolio for an initial cash consideration of £106.6 million including working capital. The final consideration may be increased by up to £2.1 million, contingent on securing asset life extensions. The Company will receive the economic benefit of all cash flows from the portfolio from 1 January 2020.
The portfolio consists of 15 ground-mounted operational solar PV plants, with 8 sites clustered in the south west of England, 2 in west Wales and a further 5 across central and eastern England. The portfolio benefits from attractive subsidies; 13 of the projects are accredited under the Renewable Obligation Certificate (‘ROC’) regime with tariffs ranging from 1.4 – 2.0 ROCs, while two of the projects are accredited under the feed-in-tariff (‘FiT’) scheme. Including the FiT projects, the weighted average tariff for the portfolio is equivalent to circa 1.8 ROCs/MWh. In the period 2021-2033 (2033 being the year in which the subsidies on the earliest plants begin to expire), the proportion of regulated revenues from this portfolio is projected to be approximately 66% (compared to 57% for the Company’s existing portfolio).
The acquisition has been financed by a bespoke three-year, interest only, re-drawable term loan at an effective all in cost of circa 1.41% (being margin and swap rate). Furthermore, the Company has elected to hedge 75% of the loan over a notional 18-year period, at a swap rate of circa 0.31% until 2038, to provide underlying rate certainty in anticipation of a refinancing scenario in or before August 2023.
Following the transaction, the Company’s total outstanding debt has increased to £332.0 million and the total installed capacity of its portfolio has grown to 543 MWp.
The debt financing enables the Company to achieve the aim outlined by the Chairman in his June 2019 Statement of optimising the Company’s leverage. Using the Company’s 31 March 2020 unaudited net asset value (‘NAV’) of £418.7 million as a reference, the leverage level of the Company will rise from circa 34% to circa 44% of Gross Asset Value (‘GAV’).
An updated audited NAV, as of 30 June 2020, will be published when the Company releases its next set of accounts in September 2020.
John Rennocks, Chairman of Bluefield Solar, said: “This is an excellent acquisition by the Company. It not only combines the addition of a portfolio of high ROC banded assets with bespoke low cost financing, but also enables the Company to move its level of gearing in line with the Board’s target. This acquisition will be immediately incremental to earnings and further underpins our projected results and dividends for the current financial year ending in June 2021 and beyond. The Board and our Advisor continue to carefully assess a strong pipeline of opportunities across both primary and secondary markets.”
