Frontier Energy Limited Secures Senior Debt Mandate with Infradebt for Waroona Renewable Energy Project
Highlights
It gives us great pleasure to announce that Frontier Energy Limited and Infradebt Pty Limited (Infradebt), an Australian specialist infrastructure fund, have entered into a senior debt mandate whereby Infradebt will provide senior project finance debt for the development and operation of Frontier Energy’s Waroona Renewable Energy Project (Waroona Project). A 120MWdc solar facility and an 80MW/360MWh DC coupled battery energy storage system make up Stage One of the Waroona Project.
Highlights:
- Infrastructure Debt will supply up to $215 million in senior project financing debt for the Waroona Project’s initial development.
- Important conditions include a 17-year debt tenor and a creative repayment plan that maximizes the Project’s exposure to its alluring economics.
- As part of the agreement, Infradebt will have a long-term collaboration with Frontier Energy to fund additional battery projects, such as Stage Two of the Waroona Project.
About Infradebt
- Infradebt is a major lender to several renewable energy projects in Australia and an infrastructure financing specialist with headquarters in Australia.
- Grid-scale battery financing is the primary goal of Infradebt’s Energy Transition Fund (ETF). The 50MW/100MWh Bouldercombe Battery by Genex Power in Queensland and the 100MW/200MWh Capital Battery by Neoen in the ACT are examples of current investments.
- The 180 MW Warradarge Wind Farm, the 40 MW Greenough Solar Farm, and the 35 MW Albany Grasmere Wind Farm are just a few of the Western Australian exposures held by the Infradebt Ethical Fund (IEF), Australia’s first infrastructure debt fund that is ethically screened.
- Families and Australian superannuation funds are among the investors in infrastructure debt.
Debt Financing Process
- September 2024 is when the long-form facility agreement and security documentation are anticipated to be signed.
- The business is still looking for a strategic partner to invest with.
“The Company is delighted to mandate Infradebt, an infrastructure specialist based in Australia, to provide debt financing of up to $215 million for the development of Stage One of our Waroona Project,” said CEO Adam Kiley.
As part of the debt financing process, the Company received multiple credit-endorsed proposals from several major financial institutions. Of these, the Infradebt offer was the best because it had a more favorable interest rate and tenor, and it also offered more flexibility than the other offers. As opposed to a syndicated solution, Infradebt’s proposal calls for 100% of the debt financing, which means the company will only deal with one party.
Debt Financing Details
A debt financing process headed by debt advisory firm Leeuwin Capital Partners began in February 2024, following the release of the Stage One Definitive Feasibility Study (DFS). The Company has directed Infradebt (Mandate) to furnish debt financing for a maximum of $215 million (Project Finance) subsequent to the receipt of several proposals. The DFS calculated that $304 million would be the total capital cost for Stage One.
Discretionary funds managed by Infradebt and co-investors advised by Infradebt will fund the Project Finance. It has been verified by Infradebt that it has allocated money to provide Project Finance. The Infradebt Energy Transition Fund, a senior debt fund with the express purpose of lending money to utility-scale battery projects in Australia, will provide the lion’s share of the project finance.
The terms of the Project Finance are outlined in the Mandate, along with an approximate timeline for the completion of the arrangements that would allow for the provision of Project Finance and other items that are anticipated to be covered in more extensive Project Finance documentation.
The facility has a base rate plus a margin, which is derived from the three-month BBSY and the 12-year Swap Rate. Including the two years of construction, the facility’s tenure is seventeen years.
September 2024 is anticipated to see the execution of security documentation and a long-form facility agreement.
Following confirmation of the Reserve Capacity Price from the Australian Energy Market Operator (AEMO) in late September 2024, the ultimate debt amount will be ascertained. For the capacity year 2026–2027, the Benchmark Reserve Capacity Price of $230,000 has already been released2.
