Merriden Energy’s Western Australian power station has established a long-term flexible funding structure following the settlement of a new $44 million bond with FIIG Securities.
The Merredin Power Station is an efficient diesel plant providing fast response electricity supply to Western Australia during periods of peak demand.
The notes pay a fixed rate of 7.50 per cent a year, secured over the assets of the company, and will partially amortise over the five-year term.
Merredin Energy chairman Jon Biesse said issuing the bond with FIIG will allow them to refinance bank debt and provides more operational flexibility.
“The increasing trend towards renewables and the Federal Government’s target of 20 per cent total energy consumption being sourced from renewable fuels by 2020 coupled with the market’s need for reliable electricity has resulted in an increased need for peak power stations, such as Merredin Power Station, creating significant growth opportunities in the sector,” he said.
“Through this bond issue, we’re well placed to take advantage of these promising market conditions and consider growth opportunities, such as the potential development of a solar farm or doubling our plant’s capacity to respond to summer peak demand periods.
“We’re very pleased to have issued the bond and were impressed by the efficiency and professionalism displayed by FIIG throughout the process.”
FIIG Securities head of debt capital markets John Ricciotti said he was pleased with the outcome of the Merredin Energy bond, which secured strong interest from FIIG’s network of investors.
“Bonds exposed to the Infrastructure sector provide investors with a solid value proposition due to the strength in cash flow and asset longevity,” he said.
“Merredin Energy is a modern and efficient generator commissioned in 2012 with an effective life of over 25 years, it is critical to the stability of the WA power network and receives its revenue from the Australian Energy Market Operator.
“Bond funding is a capital solution that provides a company more flexibility over terms than bank debt, allowing organisations to take more control over operations and growth opportunities.
“FIIG is proud to have supported a number of WA companies through bond issues, supporting local business growth and expansion.”
FIIG has conducted a number of successful bond issues in Western Australia, including Cash Converters ($60m), IMF Bentham ($72m), NRW ($70m) and Merredin ($44m).