Hana Financial to fund Australia solar power project with $146 mn in senior debt

  • 2020-09-14

Hana Financial Investment Co. Ltd. has secured A$200 million ($146 million) in senior loans to finance A$320 million solar power project in Australia which it acquired from a UK energy company last month.

Hana signed an agreement on Sept. 10 to borrow the loans from the Australia and New Zealand Banking Group, Societe Generale, DBS Bank and other foreign lenders at an annual interest rate in the mid-2% range, according to investment banking sources on Sept. 13.

The debt financing deal marked the first such case for a Korean securities firm to secure funding from foreign banks for an overseas infrastructure project it has been leading as a developer.

In August, Hana took over the 162MW solar project in Columboola, Queensland, Australia from UK solar developer Luminous Energy. The construction began in June and is scheduled to finish by December 2021.

Prior to the acquisition, Hana signed a joint development agreement in May with Korea East-West Power Co. Ltd. and Seoul-based Samchully Asset Management Co. to secure funding for the project. Korea East-West is a wholly owned unit of utility Korea Electric Power Corp. (KEPCO).

Financing for the A$320 million project will consist of A$200 million in senior loans and A$120 million in mezzanine loans and equity financing composed of common and preferred shares.

Hana plans to sell down the equity interest in the project to domestic institutions around the fourth quarter of this year.

EYES ON OVERSEAS RENEWABLE ENERGY

All the electricity to be produced at the plant will be sold to Queensland government-owned CS Energy under a long-term power purchase agreement. The 162MW is enough electricity to power around 100,000 homes.

Korea East-West is in discussions to manage and operate the power plant as an equity investor from the second year of operation. It will also mark the power utility’s first investment in Australia’s renewable energy market.

Hana Financial has been actively investing in renewable energy infrastructure deals such as solar and wind power plants.

In January, it acquired the entire equity interest of three wind farms in Finland for 180 billion won, jointly with Korea Investment & Securities Co. Ltd. Korean Western Power Corp., 100%-owned by KEPCO, has invested 20 billion won in the portfolio. The Finnish government has signed a 12-year power purchase agreement for the wind farms.

In July, Hana became the first Korean securities firm to invest in an overseas ESS by underwriting $117 million worth of senior loans on an energy storage system (ESS) development project near Los Angeles, California.

Earlier this month, a consortium of Hana and four other Korean companies acquired a 49.9% equity interest in a portfolio of four US wind farms in Illinois, Nebraska and Texas for an undisclosed sum. The other consortium members are Korea Hydro & Nuclear Power Co., Ltd., Alpha Asset Management, Sprott Korea Investment and Korea Investment & Securities Co. Ltd. Brookfield holds the remaining 50.1% stake in the portfolio.

By Seon-pyo Hong

rickey@hankyung.com

<Edited by Yeonhee Kim>

(Photo: Getty Images Bank)