Northern Ireland energy supplier Viridian has offered a small sweetener to holders of its €600 million worth of bonds to dissuade them from calling in their investment in the company once it is taken over by I Squared Capital Advisors, a US investment firm.
Under Viridian’s existing bond documents, it faces having to repay bondholders immediately after the takeover is completed in the coming months. The deal was announced last week and understood to be worth about €1 billion.
To escape the bond repayment trigger, it has offered investors an additional €2.50 for every €1,000 they are owed. Bondholders in Viridian, owner of Energia and Power NI, have until the close of business today to accept the offer. If holders of more than half the notes consent to the waiver, it will be imposed on all.
Brexit
Take-up of the offer is likely to come down to bond investors’ views of the prospect of the UK exiting the European Union, which may damage Viridian’s business and expansion plans, according to Joseph McGinley, a fixed-income analyst with Davy in Dublin.
The notes were sold last year with a 7.5 per cent coupon and payback date in 2020.
“Given the existing investor support for Viridian’s business model, acceptance of the offer will really boil down to their opinion on the prospect of a Brexit as opposed to their opinion of the company or its new owners,” Mr McGinley said.
“If they back the waiver, it will give Viridian and its new owners breathing space to reorganise the company’s capital structure at a later date.”
Likely take-up
A spokesman for the company declined to comment on likely investor take-up of the offer.
The bonds have increased in value to €1.05 from less than 98 cents in early October, when it first emerged that Viridian’s Bahraini owner, Arcapita Bank, was planning to sell the business.
Arcapita, which bought the Belfast-based power company in 2006, filed for a US form of bankruptcy protection, known as chapter 11, in 2012. It emerged from bankruptcy a year later .
I Squared said last week it planned to grow the company by expanding its 20 per cent share of the Irish power market and by buying other businesses.
