Altius Renewable Royalties (ARR) and certain subsidiaries of ARR’s 50% owned Great Bay Renewables (GBR) joint venture, entered into senior secured credit financing agreements in the aggregate amount of $247 million. The financing includes a $123.5 million initial term facility (ITF), a $100 million delayed draw term facility and a $23 million letter of credit facility, with the two term facilities qualifying for green loan eligibility. Great Bay is jointly controlled by ARR and certain funds managed by affiliates of Apollo Global Management.

MUFG Bank and Natixis Corporate & Investment Banking are coordinating lead arrangers, bookrunners, syndication agents and hedge providers with respect to the facilities.

“We are pleased to secure this facility, which enables us to accelerate our growth trajectory in the renewable royalty sector while maintaining a competitive cost of capital,” Frank Getman, CEO of Great Bay, said. “This agreement represents another strong endorsement of our business model, and with over $350 million of investment agreements signed to date, positive cash flow, and an approximate 15.0 GW portfolio of development stage royalties, we are well positioned to continue scaling our platform. We are also thankful for the strong support we’ve received from two leading banks, MUFG and Natixis, and look forward to building upon this relationship as we continue to grow the company.”

Key terms of the credit facility are as follows:

  • Subject to certain conditions precedent, initial draw of $123.5 million of the ITF to be used for closing costs and return of capital to the shareholders, ARR and Apollo. The joint owners intend to reinvest the debt proceeds back into GBR as future royalty investment opportunities arise.
  • Subject to certain conditions precedent, delayed draw facility of $100 million available in tranches for future royalty acquisitions, with the amount available to Great Bay to be determined based on expected revenue parameters, with adjustment factors for merchant versus contract weighting and renewable energy source. The delayed draw facility will be available for the first three years of the term.
  • $23 million letter of credit to accommodate debt service reserve requirements and for development stage renewable royalty investment support.
  • Initial term of five years for the credit facilities.
  • Repayments based on expected interest rates based on a 20-year amortization period. Repayable anytime without penalty. Interest payments are expected to be met by existing operating royalty cash flow.
  • A pledge of equity and security in the form of first lien on existing cash generating assets or expected near term cash generating assets of Great Bay, along with a pledge of the equity in the subsidiary holdings of its developer investments (including Hodson, Hexagon, Bluestar and Tri Global Energy investments).
  • The credit facility agreements contain customary representations and warranties, covenants and events of default (subject to customary grace and cure periods).

In connection with the financing, Great Bay entered into a floating-to-fixed interest rate swap to lock in approximately 100% of the interest rate on the ITF for the full term of the debt. In addition, GBR has entered into a floating to fixed interest rate swap to lock in approximately 50% of the initial draw beyond the initial term for the amortization period to reduce refinancing risk. Great Bay expects the interest rate on the fixed portion of the debt to be approximately 6.4% per annum excluding financing closing costs for the first three years and approximately 6.5% for the last two years of the term of the loan. If required, Great Bay may enter into further interest rate swaps to lock in interest rates in connection with the delayed draw facility.

The borrowing is intended to finance or reimburse investments previously made in eligible green collateral projects, under the categories of “Renewable energy production” and “green technologies – energy storage systems”, under the green loan principles administered by the International Capital Market Association.

Great Bay was advised on this transaction by the legal teams at Vinson & Elkins and Pierce Atwood, and the advisory team at Apterra Infrastructure Capital.