LONDON: GCP Infra has successfully divested its loan note holdings in the Blackcraig Wind Farm, achieving a 6.4% premium over the project’s valuation as of 31 March 2024. The Blackcraig Wind Farm, a 52.9MW onshore facility situated in Dumfries and Galloway, Scotland, has been operational since May 2018 and enjoys the financial backing of Renewable Obligation Certificate (ROC) subsidies.

The initial acquisition of the senior secured loan notes took place in 2017, purchased from the UK Green Investment Bank. In a notable shift in July 2018, GCP Infra opted to convert its repayment rights under the senior loan notes into an equity-like stake in the wind farm project.

This disposal has yielded approximately £31 million in net cash proceeds for GCP Infra. These funds are earmarked for the early repayment of the company’s revolving credit facility. This financial maneuver is anticipated to reduce GCP Infra’s net debt to around £45 million in the forthcoming weeks. Additionally, the transaction has lessened the company’s equity-like investment exposure within the onshore wind energy sector.

In line with the capital allocation policy outlined in the 2023 Annual Report and Accounts, the Board of Directors remains committed to decreasing leverage significantly. The policy aims to release £150 million from the portfolio through asset sales or refinancing, thereby lowering debt levels and enabling a minimum return of £50 million to shareholders by the end of 2024.

The successful sale of the Blackcraig Wind Farm stake marks a commendable progression towards fulfilling the company’s capital allocation strategy. It not only reduces financial leverage but also scales down equity-related risks within the portfolio. The Board, alongside Gravis Capital Management Limited, the appointed Investment Adviser, continues to scout for further refinancing and disposal opportunities to meet the established policy goals.

Andrew Didham, Chair of GCP Infra commented: “This disposal reinforces the Company’s commitment to its capital allocation policy, prioritising the reduction of leverage in the first instance, through a significant repayment of revolving credit facilities. It will further benefit the risk adjusted return of the portfolio, reducing equity-like exposure and exposure to electricity price movements.”