Polaris Infrastructure closes $110 million debt refinancing in Nicaragua

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San Jacinto-Tizate geothermal power plant, Nicaragua (source: Polaris Infrastructure)

Polaris Infrastructure secures loan refinancing to align with new PPA for its San Jacinto-Tizate plant and expansion in Nicaragua.

geothermal operator Polaris Infrastructure Inc. announces that it has entered into a definitive financing agreement with three development financial institutions (DFIs) for a senior credit facility aggregating US$110 million for the company’s wholly-owned geothermal subsidiary in Nicaragua. The refinancing was secured with the coordination of a financial institution specializing in debt structuring for energy and infrastructure projects in Latin America and the Caribbean.

This senior credit facility replaces existing senior and subordinated project loans in Nicaragua. Following the December 2020 extension of Nicaragua’s Power Purchase Agreement (PPA) to 2039, and in line with Polaris Infrastructure’s strategy, debt refinancing now aligns debt amortization with the PPA newly extended.

The Senior Debt Facility will have a duration of 15 years from 2022, with an initial interest rate spread of 7.0% which will be reduced to 6.75% once the Binary Unit is completed, currently scheduled for fourth quarter of 2022. We announced last August that the plant would be built by Ormat Technologies. The complete and revised amortization schedule will be included in the Company’s annual financial statements for the year ended December 31, 2021.

Marc Murnaghan, CEO of Polaris Infrastructure, said, “The alignment results in a significant increase in net free cash flow over the next six years compared to the previous loan structure, which will allow the company to support its continued objective of diversification both by jurisdiction and by asset class. In addition, other changes such as the removal of existing subordinated debt, reduction of cash and required capital reserves will provide additional flexibility to the Company over the term of the contract.

Source: Company press release

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