Innergex Announces the Completion of CAN$912.6 Million Green Bonds in Chile

Innergex Renewable Energy Inc. (TSX: INE) (“Innergex” or the “Corporation”) announces the successful completion of a US$803.1 million (CAN$1.032 billion) refinancing of the non-recourse debt of its portfolio of wholly owned assets in Chile with the issuance of US$710.0 million (CAN$912.6 million) green bonds maturing in 2036 (with a balloon payment of US$139.0 million ((CAN$178.7 million)) and a US$93.1 million (CAN$119.7 million) letter of credit facility. A core group of global institutional investors participated in the transaction, which saw strong demand and was significantly oversubscribed.

“The positive reception from investors is a reflection of Innergex’s financial strength and growth prospects in Chile,” said Michel Letellier, President and Chief Executive Officer of Innergex. “Our team was able to secure more favourable terms on our refinancing allowing for additional financial flexibility and extending the average maturity. This refinancing allows us to unlock our portfolio value, optimize our capital structure and align with our growing business as we continue to focus on delivering long-term returns to shareholders.”

The portfolio being refinanced is composed of a combination of solar, wind and hydro assets as well as battery energy storage systems (“BESS’’) assets wholly owned by Innergex. Included in the portfolio are the San Andrés solar farm (50.6 MW) and the three Aela wind farms (332 MW), both acquired earlier this year, as well as the Licán hydro facility (18 MW), Mampil hydro facility (55 MW), Peuchén hydro facility (85 MW), and Salvador solar facility (68 MW) together with a 50 MW/250 MWh BESS project currently under construction. Innergex also owns a 55% interest in Pampa Elvira solar thermal facility (34 MW) and a 69.5% interest in Guayacán hydro facility (12 MW), which were not incorporated in the portfolio being financed. In May 2022, Innergex announced that two new utility-scale battery energy storage projects, totalling 85 MW/425 MWh (5 hours per project), are currently under development in Chile.

Overall, the Chilean portfolio of assets received an investment grade rating, and the green bonds were priced at competitive levels in the United States Treasury (“UST”). The refinancing process will allow Innergex to unlock US$31.7 million (CAN$40.7 million) of cash at closing and benefit from a pre-hedging strategy providing an additional US$55.8 million (CAN$71.9 million) in cash proceeds.

The net proceeds will be used to finance US$176.2 million (CAN$226.5 million) of the acquisition of Aela wind farms, while US$72.6 million (CAN$93.3 million) will be used to finance all development activities for the Salvador energy storage project. The remaining balance will be used to repay US$548.7 million (CAN$705.3 million) of the existing debt and other transaction costs.

The issuance of green bonds is related to the forward start interest rate swaps entered into on February 17, 2022 with an aggregate notional amount of US$331.2 million (CAN$425.8 million) in order to manage its exposure to the risk of increasing interest rates on a portion of the expected refinancing of the acquisition of Aela wind farms and the existing Chilean projects. On July 25, 2022, the interest rate swaps previously entered into were settled in favour of Innergex, for US$41.2 million (CAN$53.1 million). Moreover, the unwind of interest rate swaps related to the current financings will provide an additional US$14.6 million (CAN$18.8 million) of cash.

SMBC and CIBC World Markets Corp acted as placement agent (books) and co-agent respectively for this transaction. SMBC also acted as Financial Advisor to Innergex in respect of the structuring of the transaction, as Sole Green Bond Coordinator, and as sole issuing bank of the letter of credit facility.

The green bonds described above were offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Act”). Accordingly, the securities may not be offered or sold in a public offering, since the Act exempts from registration only transactions by an issuer not involving any public offering.