Eco Investor April 2017

Pre Dividend Securities

New Wind Farm for Infigen

Infigen Energy is to build the 113.2 MW Bodangora wind farm near Wellington in New South Wales, its first new wind farm in many years. The company has launched an underwritten capital raising of $151 million to pay for the equity component of the project and also to possibly refinance its Global Facility and Woodlawn Project Finance Facility. The institutional entitlement offer and the retail entitlement offer are at 89 cents per security.

The decision to proceed follows Infigen securing a power purchase agreement (PPA) with EnergyAustralia for 60 per cent of the electricity and Large Scale Generation Certificates (LGCs) from the wind farm. The balance of the output will be available to contract to commercial and industrial customers or to sell on the spot or wholesale market.

The wind farm will have 33 turbines and the expected annual output is 361 GWh. The total project cost is $236 million, of which $163 million is coming from a construction facility provided by NORD/LB and the Clean Energy Finance Corporation and $74 million is Infigen's equity. The project should be fully operational in the second half of 2018.

Infigen's managing director Ross Rolfe said the company is looking forward to delivering a high quality project, and that "the project could not proceed without the support of the local community for which we are grateful." Infigen is known for its work at winning and keeping local support, which nowadays is crucial for new wind farms.

He said "The opportunity and capacity to integrate a substantial volume of new renewable energy generation in NSW makes the state one of the key markets for Infigen."

TCI security holders, who hold 32.1 per cent of Infigen, will take up their respective entitlements and will sub-underwrite part of the retail component of the entitlement offer for up to 16.9 million securities. If all sub-underwriting were called, the maximum TCI security holders will hold of Infigen's total securities would be 33.9 per cent.

The institutional part of the entitlement offer raised about $100 million. Existing institutions took about 97 per cent of their entitlements and the shortfall was allocated to those who bid for more than their entitlement plus other institutions. The retail offer closes on 27 April.

The equity raising will enable Infigen to potentially refinance its Global Facility and Woodlawn Project Finance Facility. This would be a big move for Infigen. As well as reducing debt servicing costs, it would free cash flow from operations to be available for investment in growth and/or for distributions. Infigen has a big development pipeline of potential projects and has not paid a dividend for many years.

Infigen has also increased its full year underlying earnings (EBITDA) guidance by 5 per cent to $147 million.

Infigen's shares closed at 98 cents before the offer, but have since risen to $1.07 despite the offer being at 89 cents. (ASX: IFN)

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Infigen's operating assets and assets under construction.






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