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Polaris Infrastructure closes $110m debt refinancing in Nicaragua

Polaris Infrastructure closes $110m debt refinancing in Nicaragua San Jacinto-Tizate geothermal plant, Nicaragua (source: Polaris Infrastructure)
Alexander Richter 20 Feb 2022

Polaris Infrastructure secures refinancing of loan to align with new PPA for its San Jacinto-Tizate plant and expansion in Nicaragua.

Geothermal operator Polaris Infrastructure Inc. announces  announce that it has closed funding of a definitive financing agreement with three Development Financial Institutions (DFI’s) for a Senior Debt Facility totalling $110 Million USD for the Company’s wholly-owned geothermal subsidiary in Nicaragua. The refinancing was secured with the coordination of a financial institution specialized in debt structuring for energy and infrastructure projects in Latin America and the Caribbean.

This Senior Debt Facility replaces the existing Senior and Subordinated project loans in Nicaragua. Further to the December 2020 extension of Nicaragua’s Power Purchase Agreement (PPA) to 2039, and consistent with Polaris Infrastructure’s strategy, the Debt Re-Financing now aligns the amortization of the debt with the newly extended PPA.

The Senior Debt Facility will have a 15-year term beginning in 2022, with an initial interest rate spread of 7.0% that will be reduced to 6.75% once the Binary Unit has been completed, which is currently scheduled for the fourth quarter of 2022. We reported in August last year that the plant will be built by Ormat Technologies. The full, revised amortization schedule will be included in the Company’s annual financial statements for the year ended December 31, 2021.

Marc Murnaghan, Polaris Infrastructure’s CEO commented, “The alignment results in significant increased net free cash flow over the next six years compared to the prior loan structure, which will enable the Company to support its continued objective of diversifying by both jurisdiction and asset class. In addition, other changes such as removing the existing subordinated debt, reducing required cash and capital reserves will provide additional flexibility for the Company over the term of the contract.”

Source: Company release