Harmony Energy Inc. - Debt Refinance, Market Auction & Notice of Results

Harmony Energy Income Trust

22/02/2024 07:00

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RNS Number : 0100E  Harmony Energy Income Trust PLC  22 February 2024

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THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION (EU) NO 596/2014 WHICH IS PART OF UK LAW BY VIRTUE OF THE EUROPEAN
UNION (WITHDRAWAL) ACT 2018 ("MAR"). UPON PUBLICATION OF THIS ANNOUNCEMENT,
THE INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN FOR THE
PURPOSES OF MAR.

 

22 February 2024

 

Harmony Energy Income Trust plc

(the "Company" or "HEIT")

 

Debt Refinancing, T-1 Capacity Market Auction Results, and Notice of Results

 

 

Harmony Energy Income Trust plc, which invests in battery energy storage
("BESS") assets in Great Britain, is pleased to announce the successful
refinancing of its existing debt arrangements, as well as the results of the
recent T-1 Capacity Market auction.

Amended & Restated Debt Facility

On 21 February 2024 the Company completed the amendment and restatement of its
existing debt facilities with NatWest plc ("NatWest") and Coöperatieve
Rabobank U.A ("Rabobank"). The new long-term amortising structure is
reflective of the evolving nature of the Company's portfolio from
"construction" to "operational". The changes include:

·      the amalgamation of the previous £110 million term facility and
£20 million revolving credit facility into a single combined facility of
£130 million (which is fully drawn);

·      an extension of the legal maturity date from June 2027 to
February 2031;

·      a reduction in margin to 275 bps over SONIA for the first two
years, rising over time to a maximum of 350 bps in the final year; and

·      a re-sizing of market standard debt covenant ratios against
conservative revenue forecasts to ensure ongoing headroom in the current
revenue environment.

The Company expects to put in place new interest rate hedging arrangements and
will disclose further details in due course. The new margin represents
reductions of 25 bps compared to the margin applied on the previous £110
million term facility and 50 bps compared to the margin applied on the
previous £20 million revolving credit facility.

The structure allows for voluntary prepayments during the term (subject to a
fee) and for cash sweeps in favour of the lenders in the event of material
revenue outperformance above pre-agreed thresholds, enabling an acceleration
of de-gearing in a cost-efficient manner whilst also reserving operational
free cash flow for shareholder distributions.

T-1 Capacity Market Auction Results

On 20 February 2024, six of the Company's BESS assets successfully bid for T-1
Capacity Market contracts for delivery from 1 October 2024 through to end
September 2025. The auction cleared at £35.79/kw/yr, lower than last year but
higher than the Company's expectations. Once de-rating is taken into account,
this increases the Company's contracted revenue for this period to £3.2
million (circa £8k/MW), of which £1.7 million has not yet been factored into
the Company's modelled cash flows. The Company's Broadditch and Farnham
projects did not participate in this T-1 Capacity Market auction because their
respective T-4 Capacity Market contracts will commence from 1 October 2024
(for delivery over 15 years) and it is not permitted for a project to hold two
Capacity Market contracts in relation to the same delivery period.

Notice of Results

The Company expects to publish its 31 January 2024 NAV as well as its annual
report and accounts for the year ended 31 October 2023 on Wednesday 28
February 2024.

Norman Crighton, Chair of Harmony Energy Income Trust plc, said:

"The debt refinancing provides a stable platform for the Company to operate in
the current lower revenue environment. This continues to enable the Company to
complete construction of its remaining three projects but now includes a long
term amortisation profile which also provides flexibility for accelerated
de-gearing as opportunities arise either through asset sales or revenue
outperformance. Whilst this initiative was always planned for 2024 to reflect
the transition of the portfolio to being fully operational, the recent
feedback from shareholders has encouraged us to accelerate our plans.  The
Board would like to thank the teams at NatWest and Rabobank for their
continued support, as well as the Investment Adviser for its hard work over
the past few months".

END

 

For further information, please contact:

 

 Harmony Energy Advisors Limited
 Paul Mason

 Max Slade

 Peter Kavanagh

 James Ritchie
 info@harmonyenergy.co.uk (mailto:info@harmonyenergy.co.uk)

 Berenberg                                                    +44 (0)20 3207 7800

 Ben Wright

 Dan Gee-Summons

 Stifel Nicolaus Europe Limited                               +44 (0)20 7710 7600

 Mark Young

 Edward Gibson-Watt

 Rajpal Padam

 Madison Kominski

 Camarco                                                      +44 (0)20 3757 4980
 Eddie Livingstone-Learmonth

 Andrew Turner

 JTC (UK) Limited                                             +44 (0)20 3832 3877
 Uloma Adighibe

 HarmonyEnergyIncomeTrustPLC@jtcgroup.com
 (mailto:HarmonyEnergyIncomeTrustPLC@jtcgroup.com)

 

 

LEI: 254900O3XI3CJNTKR453

 

About Harmony Energy Advisors Limited (the "Investment Adviser")

The Investment Adviser is a wholly owned subsidiary of Harmony Energy Limited.

The management team of the Investment Adviser have been exclusively focused on
the energy storage sector (across multiple projects) in Great Britain for over
seven years, both from the point of view of asset owner/developer and in a
third-party advisory capacity.  The Investment Adviser is an appointed
representative of Laven Advisors LLP, which is authorised and regulated by the
Financial Conduct Authority.

Important Information

This announcement contains inside information for the purposes of Article 7 of
MAR. Upon publication of this announcement, the inside information is now
considered to be in the public domain for the purposes of MAR. The person
responsible for arranging the release of this announcement on behalf of the
Company is Harmony Energy Advisors Limited.

This announcement does not constitute an offer to sell or the solicitation of
an offer to acquire or subscribe for shares in the Company in any
jurisdiction. This distribution of this announcement outside the UK may be
restricted by law. No action has been taken by the Company that would permit
possession of this announcement in any jurisdiction outside the UK where
action for that purpose is required. Persons outside the UK who come into
possession of this announcement should inform themselves about the
distribution of this announcement in their particular jurisdiction.

This announcement contains (or may contain) certain forward-looking statements
with respect to certain of the Company's plans and/or the plans of one or more
of its investee companies and their respective current goals and expectations
relating to their respective future financial condition and performance and
which involve a number of risks and uncertainties. The Company's target
returns are a target only and there is no guarantee that these will be
achieved. This Company cautions readers that no forward-looking statement is a
guarantee of future performance and that actual results could differ
materially from those contained in the forward-looking statements.

It should also be noted that any future NAV per Share announced by the Company
in due course will, in addition to the matters described in this announcement,
also be affected by valuation movements in the Company's portfolio and other
factors including, without limitation, purchase prices of battery energy
storage systems and components, project development and construction costs,
income and pricing from contracts with National Grid ESO and other
counterparties, the potential for trading profitability in the wholesale
electricity markets and/or Balancing Mechanism, performance of the Company's
investments, and the availability of projects which meet the Company's minimum
return parameters in accordance with the Company's investment policy .

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