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Nikkei Markets

Tenaga Nasional secures 120 million pound financing facility

Deal marks end of refinancing 80% stake in two UK wind energy companies

Under a 10-year program, Tenaga Nasional is targeting to build a portfolio of international assets that would account for 20% of its earnings.

KUALA LUMPUR (Nikkei Markets) -- Malaysia's national energy utility Tenaga Nasional said Monday it has secured a 120 million pound ($168.77 million) financing facility with Bayerische Landesbank to refinance its 80% stake in two U.K. wind energy companies.

The arrangement marks the completion of Tenaga's refinancing for its U.K. wind portfolio and the company anticipates further investments in the renewable energy sector, Tenaga said in a statement. Tenaga, in February, had acquired GVO Wind and Bluemerang Capital for 77.37 million pounds.

"This refinancing exercise is a significant step for TNB as we continuously expand our renewable energy operations," said Tenaga Chief Executive Azman Mohd.

The refinancing exercise is the first overseas non-recourse acquisition refinancing that Tenaga has undertaken through a wholly owned unit. The deal is also the U.K.'s largest financing for medium scale operational feed-in tariff on-shore wind portfolio to date.

The acquisition of GVO Wind and Bluemerang Capital marks Tenaga's maiden foray into onshore wind sector in the U.K. The two companies own the largest feed-in tariff wind portfolio in the U.K., comprising 53 medium wind turbines with combined capacity of 26.1 megawatts.

"With this transaction, the bank supports TNB's strategy to increase investment in renewable energy and other environmental assets," Karin Schramm, senior director of project finance at Bayerische Landesbank, said in the statement.

Dentons UK and Middle East LLP, Longspur Capital and JCRA assisted Tenaga in the refinancing exercise. Tenaga had previously hired Longspur Capital, a power infrastructure asset manager and investor, to manage the acquired wind portfolio and source new renewable investment in the U.K.

Tenaga said revenue from the latest acquisition is equivalent to 85 mega-watts wind projects or 150 MW solar farms. At least 97% of the portfolio's revenue is contracted through the U.K. government-backed renewable feed-in-tariff support mechanism and guaranteed export tariff.

Tenaga produced over 14,500 megawatts of power in the last fiscal year with coal and natural gas making up 78% of its overall capacity. Renewable sources only make up less than 2% of its current generation capacity. The remainder comes from oil and hydel sources.

According the company's stated goals, its longer-term aim is to grow earnings before interest and tax to 20 billion ringgit by 2025. Under a 10-year program, Tenaga is targeting to build a portfolio of international assets that would account for 20% of its earnings.

Shares of Tenaga fell 0.3% at 16.20 ringgit apiece on Monday, while the benchmark FTSE Bursa Malaysia KLCI also fell 0.3%.

-- Gho Chee Yuan and Jason Ng

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