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Octopus completes £174 million refinancing of UK biomass and landfill gas portfolio

  • At 172MW, Octopus manages the largest independent portfolio of biomass and landfill gas projects in the UK
  • One of the largest biomass and landfill gas refinancings to be done in the UK to date

Octopus Investments (“Octopus”), part of the Octopus Group, has completed a £174 million refinancing of a biomass and landfill gas portfolio, making it one of the largest transactions of its kind and the first major UK biomass deal in 2018.

The refinancing of the Melton Renewable Energy UK Limited (MRE) portfolio consists of a £152 million term loan, £10 million revolving credit facility and £12 million debt service reserve facility.

The biomass portfolio, which Octopus acquired on behalf of its investors in 2015, includes 5 biomass plants and 22 landfill sites. All of the biomass projects are dedicated biomass plants, as opposed to co-firing facilities, sourced from a range of local UK sustainable feedstock including poultry litter, meat and bone meal, horse bedding, and forestry wood chips. With a combined generational capacity of 172MW, the projects make up the UK’s largest independently owned biomass and landfill gas portfolio. 

The funding package was provided by 6 major banks: National Westminster Bank Plc, HSBC UK Bank plc, AIB Group (UK) p.l.c, Investec Bank PLC, Barclays Bank PLC and Banco de Sabadell S.A. 

Matt Setchell, Head of Octopus’ energy investment team, said:

“Following our record-breaking solar refinancing last year, once again the Octopus team has delivered another significant transaction with this funding package for the biomass and landfill portfolio that we manage. As the UK’s largest non-utility investor in onshore renewables, we continue to set the benchmark high for negotiating market leading debt financings with innovative features such as a flexible fuel procurement and usage of short term PPAs to drive value

“More widely, this is a boost to the UK biomass industry, which plays an essential role in extracting maximum value from organic waste streams and diversifying our energy mix. The involvement of major bluechip lenders in the deal further highlights the confidence in the future of biomass in this country.”

Eddie Wilkinson, Chief Executive of MRE, commented:

“Completion of this transaction marks another significant milestone for the MRE business which continues to go from strength to strength. This represents a positive step and is testament to the operational team which continues to deliver outstanding performance, dealing with vast quantities of agricultural residues and making a significant contribution to the UK’s renewable energy sector.”

Octopus and MRE were advised by Linklaters as legal counsel and Natwest Structured Finance as financial advisor. The lenders were advised by Ashurst as lenders counsel, Fichtner as biomass technical advisor, Golder as landfill gas technical advisor, Operis as model auditor and Baringa as market advisor.

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For journalists in their professional capacity only. Personal opinions may change and should not be seen as advice or a recommendation. We do not offer investment or tax advice. Issued by Octopus Investments Limited, which is authorised and regulated by the Financial Conduct Authority. Registered office: 33 Holborn, London, EC1N 2HT. Registered in England and Wales No. 03942880. Issued: July 2018.