Polaris agrees USD-110m debt refinancing in Nicaragua

Canadian renewables developer Polaris Infrastructure Inc (TSE:PIF) has agreed a USD-110-million (EUR 97.7m) senior debt facility for its fully-owned geothermal subsidiary in Nicaragua.

The Toronto-based company announced on Thursday that it has signed a definitive financing agreement with three development financial institutions (DFI) for this 15-year senior debt facility, which is supposed to replace existing senior and subordinated project loans in Nicaragua.

In the Central American nation, Polaris operates the 72-MW San Jacinto-Tizate geothermal power plant, whose power purchase agreement (PPA) was extended by 10 years in December 2020 and is now set to expire in 2039.

The new debt facility has an initial interest rate spread of 7.0%, to be lowered to 6.75% once a 10-MW binary unit has been deployed at the San Jacinto site. This is currently expected to happen in the final quarter of 2022.

Polaris noted that the refinancing aligns the amortisation of the debt with the newly extended PPA.

"The alignment results in increased cash flow over the next six years, 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,” CEO Marc Murnaghan stated.

(USD 1.0 = EUR 0.888)

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