Belfast-based energy group Viridian bought back a tenth of its €600 million of high-cost bonds this week and signalled that it is considering taking advantage of favourable markets to refinance the remaining notes to slash its interest bill.
The debt, issued in February 2015, carries a 7.5 per cent interest rate, or coupon, equating to €45 million a year. The company's recent move to redeem bonds is in line with the terms of the debt documents, which allow Viridian, owner of electricity and gas supplier Energia and Power NI, to buy back this amount annually.
However, Viridian also passed a milestone on Friday where it can exercise an option for early redemption of the remainder of the debt, which is ordinarily not due to mature until 2020.
Responding to a question from an analyst this week on a conference call, Viridian chief executive Ian Thom said the fact that the market financing costs of rivals "below 4 per cent is obviously a significant point of interest to us" as the company keeps its capital structure under review.
A spokesman for the company declined to say whether Viridian had any firm plans to refinance the bonds.
Meanwhile, the US private equity firm I-Squared which bought Viridian last year in an estimated €1 billion deal sold down a minority stake in the company earlier this year. The spokesman declined to identify the name of the buyer or the size of the stake that was sold.
The Irish Times first revealed the stake sale plan in May, when it reported that investment bank Evercore was advising I-Squared on the matter.
I-Squared, founded in 2012 by former executives from Morgan Stanley, originally bought Viridian last year from Bahrain’s Arcapital Bank, which owned the power company for almost decade.
Meanwhile, Viridian reported operating profits of £28.8 million (€31.4 million) for the three months to June, its first fiscal quarter, compared to £28.8 million for the same period last year, according to its latest financial report, published during the week.
Revenue for the quarter rose to £314.7 million from £286.7 million.
Last month, ratings agency Moody’s raised its view on Viridian’s creditworthiness to ‘positive’ from ‘stable’, as it ramps up its energy generation from wind farms, “which will add stable cash flows”.
