Renergen signs $500m debt retainer for Virginia Gas Project
Gas producer and US government’s financial development institution will assess the project and weigh potential for on-site diligence.
JSE-listed gas producer Renergen has signed a debt retainer letter, valued at $500 million (over R7.7 billion), with US International Development Finance Corporation (DFC) to fund the second phase of the Virginia Gas Project, based in Free State.
“The debt amount available to the company will significantly reduce the amount of equity needed, while ensuring sufficient headroom to meet financial covenants,” adds Renergen CEO Stefano Marani.
According to Marani, Renergen is in the process of optimising phase two operations and is aiming to achieve a target of up to 65% of debt funding on the phase two project capital amount.
In a statement issued on Monday Renergen added that the DFC, which also invested $40 million for the first phase of operations, facilitated a test screening of the proposal for phase two financing.
“Renergen and DFC will now commence further analysis on the project, including potential on-site diligence following commission of the phase one plant.”
“We find ourselves in a very strong position as we embark on turning on the Virginia Gas Project plant in the coming weeks,” adds Marani.
Renergen, which is the first commercial onshore producer of helium and liquified natural gas (LNG), confirmed in its preliminary final report of its results for the year to end February 2022, that it was in the final stages of commissioning the Virginia Gas Project.
In addition to DFC, it says it also received multiple letters of intent to co-lend for phase two operations from additional lenders. This, according to Renergen, will have a cumulative value of more than $700 million in senior debt, which will exceed the remaining debt requirement.
“The lenders are currently in the process of reviewing all materials in the data room and will be conducting an onsite inspection of phase one operations, as part of the due diligence for the debt financing of phase two.”