Escal UGS, the project company behind Spain’s Castor gas project, has received a compensation payment of €1.35 billion from gas distributor Enagás Transporte.
Spanish developer and project sponsor ACS has paid an additional €61 million to Escal to cover the principal and accrued interest of bonds issued last year by Watercraft, the vehicle used by the company to tap the debt capital markets.
The bonds were the first ever to be backed by the European Investment Bank (EIB) through its Project Bond Credit Enhancement initiative, in a move intended to make the securities more attractive to investors by enhancing their credit rating.
The payments follow the approval by the Spanish authorities, the EIB and bondholders of Escal’s decision to relinquish the concession. They mark the resolution of the incident of seismic activity that followed initial injection in the reservoir in September last year and caused work to be halted at the Valencia-based facility.
“Despite some uncertainties of how the concession termination would be handled, the Spanish authorities resolved this promptly and in line with the legislation, approving the compensation payment to the project company equivalent to the net asset value,” commented Fitch this week.
The rating agency added that Enagás Transporte is still liable for paying for the construction cost of the reservoir, but it also noted that “the future of the asset remains unknown”.
Rival agency Standard & Poor’s on Tuesday anounced that it was withdrawing its long-term rating of the senior-secured bonds as a result of the repayment. Their rating had been raised to ‘A’ from ‘BBB’ prior to the withdrawal.