A 360° approach to efficient refinancing
Presented by SUEZ Energy MEA
CONTEXT
The Glow IPP electrical power station was developed as of 1998 by Glow Energy, the company responsible for SUEZ Energy International’s activities in Thailand. The construction was financed by several international banks at the height of the financial crisis in Asia, necessitating a political risk insurance policy. In 2004 and 2005, the Asian economy recovered. Refinancing to the tune of $195 million and $77.5 million of new debt became feasible in December 2005.
INNOVATION
Thanks to a prior 360º analysis, loan margins were reduced, the political risk insurance policy was cancelled and interest-rate swaps were rescheduled from three to twelve years. Since Glow Energy was listed on the stock exchange at the start of 2005, it was important that the refinancing of Glow IPP should have a minimal negative accounting impact. The solution that all the banks agreed to consisted of a pre-agreed transfer of the debt instead of a pay back of the debt immediately. Through contacts with European and Middle East banks not liable for taxation, Glow IPP managed to have around 70% of its current debt exempted.
RESULTS
The 360° approach generated immediate savings of around $6 million in 2006 and thus increased rofits. Lastly, Glow IPP’s finance documents were amended in order to improve the company’s and the shareholders’ positions.
