Innovative financing

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EDF Energies Nouvelles prides itself on employing innovative financial engineering to extract the maximum from its portfolio (main story). It was one of the first companies in America to develop a project of significant size with pure project finance. Also in America, the company recently signed two deals in which, instead of selling the projects, it retained a royalty share, thus freeing up equity while also ensuring a revenue stream over 20 to 30 years. Though the concept is not new, the company's David Corchia says EDF Energies Nouvelles is implementing it on an unusually large scale.

In May, EDF Energies Nouvelles also secured for the first time a medium term corporate loan with limited recourse components. The deal was arranged by Standard Chartered Bank's renewable energy team, headed by Shane Bush. It comprises a four-year EUR 40 million credit facility to fund EDF Energies Nouvelles' "development projects and potential acquisitions." Although the bank declines to go into details, it claims the loan is a "unique blend of structured corporate and project finance."

Significantly, it is not dedicated to a specific project. Much of the money will fund activity in America, but a multi-currency option means it is also available worldwide. The project finance features are associated with projects that are too small to be funded on a stand-alone and non-recourse basis, says Corchia. The loan is to EDF Energies Nouvelles direct and not to its well-heeled parent company. Corchia comments that EDF Energies Nouvelles always thought raising medium term corporate debt would not be a problem because of its credit worthiness. The deal with Standard Chartered was its first attempt to put that theory into practice and Corchia considers the deal a "very good achievement." The company kept the cost "very reasonable" by introducing limited recourse/security components, he adds.

Standard Chartered Bank and the international law firm Norton Rose also put together another complex finance deal for EDF Energies Nouvelles in June. The £85 million 14-year non-recourse project finance facility is to fund the construction and operation of five plant by Fenland Windfarms Ltd, a British subsidiary of EDF Energies Nouvelles. Work has started on three of the plant, totalling 44 MW, with the remaining 50 MW to follow shortly. The deal had to be sufficiently flexible to allow the development in two phases. It also involved restructuring an earlier facility arranged by an affiliate of Fenland Windfarms so that the two project financings could sit side by side.

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