Natixis seals landmark French institutional financing

The lender has helped Exeltium, a “virtual” power plant, secure a €1bn bank tranche and €435m from nine institutional investors.

Paris-based Natixis today announced the €1.4 billion refinancing of French power consortium Exeltium, which it says is the largest power project financing in the country so far this year.

The transaction was achieved through the combination of a €1 billion bank tranche and a €435 million tailored institutional tranche provided by a group of nine investors, the lender said in a statement. The bank bills the operation as the largest-ever institutional financing in the French power sector.

The new arrangement, effective upon drawdown as of June 4, offers Exeltium a 15-year tenor in line with the remaining duration of the project. Natixis assisted Exeltium in designing the fundraising process – which targeted both banks and institutional investors – and co-underwrote the institutional tranche.

Founded in May 2006 and described as a “virtual” power plant by Natixis, Exeltium is a consortium of companies operating in electro-intensive industries whose purpose is to negotiate and finance an optimal power supply contract for its shareholders.

The project takes the form of a take-or-pay deal with EDF, the French utility, providing for a 148-terawatt-hour (TWh) supply over 24 years for an up-front payment of €1.75 billion and a second phase concerning 163TWh over the same term.

The initial memorandum of understanding, signed between EDF and Exeltium in 2007, covered the whole 311TWh in one go – for an upfront payment of €4 billion plus proportional payments – but the contract was later split when financing conditions tightened in the wake of the Financial Crisis.

The second phase was not launched as planned in 2011 and still remains on standby, as changes in “many parameters” have perturbed the “short-term equilibrium of the mechanism”, according to the group’s website.

The first phase of the contract was financed by Exeltium through a project finance scheme, with nearly 90 percent of the initial cost borrowed by the consortium. The group started supplying electricity to its shareholders in May 2010.