Centrus advises on c. €2.5bn new facilities including pre-hedging strategy

Transaction overview

Sonnedix is a leading renewable energy producer with over a decade of sustainable growth, is dedicated to developing, building and operating renewable energy projects with a focus to delivering green, affordable electricity. The project focused on refinancing the debt associated with most of Sonnedix’s extensive portfolio of solar farms across Spain, Italy and France. The objective was to optimise the existing financial structure by refinancing €1.6+ billion in debt while restructuring the hedge strategy, maintaining a hedge ratio between 70% and 90% of the portfolio. Centrus played a pivotal role as Hedge Advisors, streamlining Sonnedix’s complex portfolio of over 130 swaps and crafting a robust hedge strategy tailored to their needs.

Centrus’ solution

Centrus partnered with Sonnedix and their debt advisors to design a customized, efficient hedging strategy. This included:

• Strategic Scenario Analysis: Running detailed quantitative assessments to evaluate multiple scenarios, focusing on maximising debt refinance benefits and shareholder NAV.
• Hedging Product Exploration: Evaluating a range of solutions, including caps, floors, forward-start swaps and the termination or novation of existing swaps, to find the optimal mix.
• Pre-Hedging Measures: Implementing a pre-hedge strategy to mitigate interest rate risks ahead of financial close.
• Market Engagement: Conducting a competitive process involving 20 banks to analyse appetite, pricing, product availability and overall suitability.
• Power Hedging: Incorporating potential for power hedging counterparties in the financing structure for future risk management

Centrus’ value added

Centrus delivered tangible results, driving significant value for Sonnedix:

• Cost Savings: A competitive auction process reduced the all-in swap cost materially through the process.
• Streamlined Portfolio: Reduced the number of swaps by over 60%, simplifying operations and enabling more efficient management.
• Seamless Transition: Executed more than 50 swap terminations and implemented new hedges, ensuring fair and transparent pricing while transitioning smoothly to the updated strategy.
• Efficient Execution: Advised on commercial doc negotiations, executed hedging documents and managed four-way novations for over 30 swaps.
• Post-Execution Review: Conducted meticulous reviews of trade confirmations to ensure commercial accuracy.

By leveraging their expertise and structured approach, Centrus ensured Sonnedix achieved a simplified, cost-efficient hedging solution, aligning with their long-term commitment to sustainable energy.

“This has been the most complex hedge restructuring in the history of Sonnedix. Hedging was one of the drivers to create value in this transaction and Centrus as hedging advisor played a key role to capture it. The transaction involved several countries, tax and legal jurisdictions, with a vast portfolio of legacy swaps. They managed every step with exceptional thoroughness and professionalism. From the pre-hedging execution and selection of the hedge coordinator, where their advice was critical to make the right decisions, to the auction process among banks and design of allocations, where the design created competition and optimized the outcome, and post-closing actions, the overall delivery for the full process has been extraordinary. We strongly recommend Centrus as hedging advisor.”

Pablo Trapero, VP Project Finance – Sonnedix

For more information, please contact Mark Taheny, Managing Director, Dublin.

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