After 5 years of hard work, renewables company Distributed Renewable Energy Networks Ltd (Drenl), believes they are on the cusp of achieving financial close on their first waste-to-energy project, Corby Renewable Energy (CRE).
With the assistance of their experienced funding partner TradeRisks Ltd, which has arranged £1.1bn in debt funding over the last 12 months, Drenl has secured commitments for £80m of the senior debt required for CRE and is now finalising the last few elements.
They are aiming to achieve financial close immediately after the Summer holiday period.
Lenders appear very encouraged about DRENL’s plans, choosing to convert a significant portion of their loans to equity, in the leadup to financial close on their Corby project.
Financial close on CRE will result in fees of £4.5m to DRENL, as well as annual recurring revenues of £400k.
Financial close on Corby could see Drenl’s value increase from its current £58.9m up to £120m, as well as the company securing an EBITDA of £20m per annum for the next 25 years, through the Corby SPV (Special Purpose Vehicle) alone.
This would be a significant uplift in the share value of the company, potentially providing investors who invest just prior to close, with a 2-2.5x return on investment, in a very short space of time.
Financial Close on CRE will also give the company the impetus and blueprint to close out other sites in far quicker time, which in many instances will result in similar fees for the business.
DRENL has 8 other sites it is looking to close over the next 3-5 years, which would also provide significant uplift in the share price.
To allow them to continue growing the company ahead of revenues, cover running costs, including land options, legal and technical advisor fees, Drenl is offering up to £1.5m of new equity in the business.
Drenl is confident of multiple exit opportunities for investors, both in the short and longer terms.
The renewables space is very active in terms of acquisition activity. Two renewable energy projects built by BWSC (Drenl’s EPC and O&M partner) were sold whilst still in construction in 2013 and 2014, for £170m and £160m respectively.
Pension Funds, in particular, are attracted to the revenue models provided by projects such as Drenl’s, and once institutional money is confirmed for Drenl, there will also be an opportunity for investors to exit, via secondary markets and potentially a market listing.