Green Bio Energy Plc. is a 100% subsidary of Agrofarm London Ltd. and has been established in order to acquire and operate 12 and up to a maximum of 30 liquid biomass fired power plants in Northern Italy. To finance this operation the company intends to issue "Green Bonds" for up to £[30] million to be listed on the London Stock Exchange .
The Agrofarm Group (the “Group”) was formed in 2012 specifically to acquire liquid biomass power stations in Northern Italy. The Group is founded on “green principles” and its focus has been to create an environmentally friendly, renewable energy supply using various biomass feedstocks. To date the group has acquired, refurbished and operated three plants profitably for a period of three years. The three plants are held through special purpose vehicle structures (SPVs) with a UK holding company. The three plants at optimal production generate circa €2.4 million per annum of EBITDA.
The Group would now like to expand the business via the issuance of “green” bonds listed on the London Stock Exchange. To begin this process the Group has formed Green Bio Energy Plc (“GBE”) which has purchased three subsidiaries from Agrofarm London being; Greenworld Power SRL (owning two plants), Berbenno Energia SRL (owning one plant) and Agrofarm UK Ltd which holds the ISCC license and license to trade in vegetable oil throughout Europe.
The power plants currently in operation under Greenworld Power Srl and Bebenno Energia Srl combust vegetable oils, such as sunflower and cottonseed oils, to generate heat and power. The electricity generated is then exported to the Italian grid through ENEL (the State Utility Company) and qualify for a green subsidy which are underwritten and paid quarterly in arrears by ENEL’s subsidiary GSE for the guaranteed revenue period of 15 years from the date of each plant’s connection to the grid. Additionally, the minimum sales price for the electricity generated, combined with the green subsidy, is €0.28 / kWh and is guaranteed and paid for by GSE.
To assist in preparing the bond offering, the company has retained a group of professional advisors which are as follows; Financial advisors (finnCap), Legal advisors (CMS London), Security Trustees (US Bank), Paying Agent (Elavon Financial Services), Accountants (Wilkins Kennedy), Auditors (BDO) and Independent Green consultants (Royal Haskoning DHV).
✓ Issue size: £[30m]
✓ Status: Secured
✓ Term: [5 years]
✓ Coupon: [7.75%], paid semi-annualy in arrears
✓ Listing: The green bond segment of the Professional Securities Market fo the London Stock Exchange
✓ Liquidity: Freely transferable
✓ Issue date: TBC
✓ Clearing and Settlement: Euroclear and Clearstream, Luxembourg
✓ Arranger: finnCap Ltd.
✓ Issuer: Green Bio Energy PLC
✓ Security Trustees US Bank Global Corporate Trust Services
✓ Paying Agents:
Elavon Financial Services DAC, UK Branch
It is porposed that the bond will provide a fixed income of [7.75%] to investors paid semi-annually in arrears. The funds raised through the issue will allow GBE to finance the acquisition, refurbishment and operation of small-scale renewable energy power plants in Northern Italy; finance the upgrade of a mill in Italy to increase capability; and acquire three existing renewable energy power plants from the parent company, Agrofarm London Ltd, in exchange for £3.8 million in consideration shares and the retirement of short term expensive debt totaling approximately £6.2 million.
An external report, consisting of a consultant’s review, has also been prepared to satisfy the London Stock Exchange’s requirement for issuers to verify the ‘green’ nature of the bond. The review has been undertaken by Royal Haskoning DHV in accordance with ICMA’s 2018 Voluntary Process Guidelines for Issuing Green Bonds. It has been confirmed that the proposed use of proceeds is eligible from a sustainability perspective.
Throughout the years, various developers of biomass plants in Italy have eventually ceased trading or gone into liquidation because they failed to secure their feedstocks at the optimum prices. Moreover, EU legislation (2012) regarding biodiesel consumption requirements resulted in an increase in the cost of vegetable oils from €400 per tonne to a peak price of €1,200 per tonne which had significant negative implications for businesses in this sector.
However, the experienced management team of the Agrofarm London fully understand the dynamics of the industry and market and has therefore entered long term agreements for the supply of feedstocks through their subsidiary Agrofarm (UK) Limited. The aforementioned agreements have therefore created an opportunity for the group to acquire power plants, in the form of ‘distressed assets’, at a significant discount to their original cost. This opportunity justifies the bond issue and the aforementioned portion of the proceeds will be contributed towards acquiring new plants.
• Existing Plants are up and running owned and operated by the group, producing combined heat and power (CHP).
• Long Term State Power Purchase Agreements in place
• Electrical connection to Grid in situ
• Technology Proven over 30 Years
• Experienced O & M Company
• Additional Heat generated and sold under purchase agreement established at Capirate plant.
• long term oil purchase agreements
• Full cradle to grave Insurance Wrap in place with investment grade insurers.
• Experienced management team