Renergen aims for a R7.68 billion loan for Phase 2 helium project
|Published
Renergen’s project has also generated excitement on the stock exchange as evidenced by the rise in share price.
The US International Development Finance Corporation (DFC) is evaluating making a loan of up to $500 million (R7.68 billion) to finance Renergen’s Phase 2 of helium and natural gas operations at the Virginia Gas Project.
Comprising 187 000 hectares of gas fields across Welkom, Virginia and Theunissen in the Free State, South Africa’s only onshore gas exploration project accesses what is believed to be one of the richest helium concentrations globally.
Renergen’s project has also generated excitement on the stock exchange as evidenced by the rise in share price.
The price came slightly off the boil by 3.34 percent to R37.94 yesterday morning, but it was still 81.53 percent higher over 12 months and 248 percent higher compared with three years ago.
The company is banking on rising global demand for helium from the healthcare, technology and aerospace sectors, and a continued shortage in the market.
Renergen CEO Stefano Marani said in a statement the DFC, which had already provided $40m for Phase 1 of operations, had conducted a preliminary screening of the proposal for Phase 2 financing.
“We find ourselves in a very strong position as we embark on turning on the Virginia Gas Project plant in the coming weeks,” he said.
Renergen and DFC would commence further analysis on the project, including potential on-site diligence, following commissioning of the Phase 1 plant.
In addition to the DFC, he said Renergen had also received multiple Letters of Intent to co-lend alongside the DFC for Phase 2 operations, from additional lenders, with a cumulative value of over $700m in senior debt, which would exceed the remaining debt requirement.
“The lenders are in the process of reviewing all materials in the data room and will be conducting an onsite inspection of Phase 1 operations, as part of the due diligence for the debt funding of Phase 2.”
He said the company had grown significantly in size and scale and now had the ability “to sculpt terms to suit our financing requirement.”
The group was optimising Phase 2 operations as part of the due diligence process, and the aim was to achieve up to 65 percent debt funding, the balance equity, on the Phase 2 project capital amount.
“The debt amount available to the company will significantly reduce the amount of equity needed while ensuring sufficient headroom to meet financial covenants,” said Marani.
Renergen said at the end of last month that the commissioning of Phase 1 was going well, with cooling systems fully commissioned, the nitrogen removal system to purify the helium commissioned, all water systems commissioned, while the LNG cryogenic vacuum jacketed pipelines were ready for use. All digital control systems were also completed.
Customer sites were being prepared to receive the liquefied natural gas (LNG), and the commercial operation date would be timed to coincide to ensure the tanks are filled and LNG was ready to be received.
BUSINESS REPORT