FTSE 250-listed energy provider Drax has agreed a 75m pound amortising loan facility maturing in June 2018 with Friends Life, underpinned by a guarantee from HM Treasury issued under the Infrastructure UK Guarantee Scheme.
Drax reported that the new loan facility would replace £50m of the £100m amortising loan facility agreed with the UK Green Investment Bank, which was signed in December 2012.
The group added that the facility enhanced the financing structure executed in 2012 by providing additional liquidity to the group, securing HM Treasury support for its plans to convert three generating units from coal to biomass and ensuring a smoother profile of debt maturities across the structure.
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The amended funding programme comprises £190m gross proceeds from an equity placing in October 2012, £100m amortising term loan facility agreed with the Prudential / M&G UK Companies Financing Fund in July 2012, £50m amortising term loan facility agreed with the UK Green Investment Bank, £75m amortising term loan facility agreed with Friends Life, underpinned by a guarantee from HM Treasury and a £400m revolving credit facility maturing in April 2016.
Tony Quinlan, Finance Director of Drax, commented: "This further strengthens our balance sheet, as we progress our project to transform the largest coal-fired power station in the UK into an electricity generator fuelled predominantly by sustainable biomass."
He added: "The benefits are multiple, from securing jobs at Drax and across the UK in the supply chain to providing low carbon, cost effective and reliable renewable power for the consumer. We are delighted to secure the support of Friends Life and Infrastructure UK."
Drax Group's share price was down 1.23% to 602p at 09:47 on Wednesday.
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