Ashurst has advised Infrastructure UK (a division of HM Treasury), Barclays as Bond Arranger and BNY Mellon as trustees on the development and financing of the Speyside Combined Heat and Power plant project in Scotland, which reached successful close on 28 August 2014.
The project, developed by Estover Energy, will generate enough renewable energy to power more than 20,000 homes and the world famous Macallan distillery will use the heat generated by the plant in the form of steam, a critical component of the distillation process.
Equity investors John Laing and the UK Green Investment Bank plan to invest £26m, alongside £48m debt to be raised from the bond market, guaranteed by HM Treasury, a first for the biomass sector.
This is the third project which Ashurst has successfully closed this year to have involved HM Treasury bond guarantees, the other two including: Mersey Gateway Bridge and the Ineos Grangemouth Ethane terminal.
The Ashurst teams were led by renewables partner Antony Skinner and infrastructure finance partner Derwin Jenkinson, who were assisted by associate Lindsey Bouchara, with Caroline Johansen and Sean Renfer also assisting, with Anna Delgado and Scott Chatterton advising Barclays and Diane Roberts and Shanine Felix advising the trustees.
Commenting on the deal, Antony Skinner said:
"This exciting project signals a landmark for the UK renewables market, and in particular for the biomass industry, being the first project of its kind to secure bond guarantees from HM Treasury.
To date, there have not been as many biomass projects to reach financial close in the UK as one would have imagined two years ago. This has been caused by regulatory uncertainty and concerns over security of fuel supply. Hopefully the Speyside project sends a message to the market that if a biomass deal is well structured, it can be successful. As such, this transaction builds on the expertise of our award-winning renewables practice."
Derwin Jenkinson added:
"This transaction provides further evidence of the transformation, over the last 18 months, of capital markets funding for infrastructure and energy projects. Medium and long term finance is now being provided to fund new assets for the UK across a range of products and sectors - including, under the HMT Guarantee, to projects and sectors that were not previously accessing the bond markets. Having advised on all three of the HMT Guaranteed public bond offers to come to market, our teams have greatly enjoyed working with our clients and the various project stakeholders to reach financial close on this transaction."
