Tuesday 07 November 2017 by FIIG Research Trade opportunities

New FIIG originated bond from Merredin Energy

Last week, Merredin Energy launched a new issue seeking to raise $44m to refinance its existing debt

merredin

The bonds are senior secured and partly amortise over a five year term, paying a 7.5% fixed rate of interest.

About Merredin Energy

Merredin Energy Pty Ltd (Merredin Energy) operates an 82 megawatt diesel powered peaking power station located near Merredin, 260km east of Perth in Western Australia. Operators of peaking stations such as Merredin Energy provide a critical stabilising service that supports the peaky load profile in the south west of Australia, helping to reduce/prevent blackouts, particularly in the summer.

  • The station is a modern and efficient generator commissioned in 2012 with an effective life of over 25 years. The project was independently valued at an enterprise value of $74.8m as at 30 June 2017
  • Palisade, one of Australia’s leading independent infrastructure asset investment managers, owns 47% of Merredin Energy (the other 53% is held by entities associated with the family office of Mr Rod Jones, the founder and Managing Director of ASX listed education company Navitas). Palisade is a manager of infrastructure assets with over $2.4bn funds under management and has history of showing support to its investments
  • Merredin Energy is well placed both geographically and strategically to provide energy reliability as a result of the government mandated move to reduce supply from older coal fired plants and increase the proportion of renewable energy
  • The Australian Energy Market Operator (AEMO) is responsible for operating Australia’s energy markets and pays Merredin Energy a regulated capacity revenue to provide the necessary backup power on demand to the West Australian wholesale electricity market

Merredin Energy bonds

  • Senior secured notes with a final maturity in November 2022, paying a fixed interest rate of 7.50% p.a. (“Notes”), quarterly in arrears
  • The Notes will amortise 30% of the Note value over the five year term of the Notes, with equal principal payments each quarter commencing on the first interest payment date, as detailed in the Research Report
  • The Notes benefit from a range of covenants including restricting further indebtedness, ensuring sufficient cash flow to service debt commitments and distribution restrictions
  • The issuer may call some or all of the Notes prior to maturity at a premium to the Note face value as determined in the Preliminary Information Memorandum

The notes are available to wholesale investors from $50,000. For more information please see the Research Report and call your local dealer. 

​Note the report requires a wholesale login.