Vestas share issue, new credit facility
Vestas unveiled plans to issue more than 20 million new shares, which could raise about €450m ($608m), and reached agreement with four banks over a new five-year revolving credit facility totalling €850m.
The Danish wind group said of the share issue: "Vestas intends to use the net proceeds of the placing to provide greater financing flexibility and to further enhance its financial stability, by strengthening its solvency ratio and obtaining more flexible banking arrangements.
"The board believes that this will facilitate the generation of additional business opportunities, thereby accelerating Vestas’ strategy of delivering profitable growth."
The credit facility deal is with Nordea, DNB, HSBC and SEB.
Recharge Insights director Robert Clover said the issue and the new credit facility "represent a sign of greater confidence in management from the financial community."
Clover added that investors are bound to wonder exactly what Vestas plans to do with the proceeds, given its otherwise healthy cash position, unless it has undisclosed M&A plans or needs to make an injection into its offshore JV with Mitsubishi Heavy Industries.
The new credit facility replaces Vestas’ existing €650m facility that expires in January next year, with an extension option to mid-2016.
The manufacturer said it is “comfortable” with the credit arrangements in place but the new agreement “will further extend the company’s maturity profile and strengthen its financial position”.
The facility provides for cash drawings and project-related guarantees.
The wind group added: “The new revolving credit facility and improved funding structure provides a stable, long-term financing platform that adequately supports Vestas’ objective of profitable growth. The facility has been raised on attractive terms that reflect the improved credit profile of Vestas.”
Vestas has spent two years implementing a turnaround strategy, which analysts say has left the company on a sounder financial footing.
Vestas CFO Marika Fredriksson said: "The new facility reflects the strengths of Vestas’ flexible operating business model and allows the company to continue its process of increasing profitability and strong cash generation.
“This agreement is a sign of confidence in Vestas and our strategy for the years ahead. Together with additional capacity for project-related guarantees, this facility puts Vestas on a firm footing to achieve our objective of profitable growth.”
Documentation is expected to be completed within the current first quarter.