Herbert Smith Freehills advises international lender syndicate on A$550m sustainability-linked loan for waste-to-energy project

Herbert Smith Freehills has advised a syndicate of international lenders on a sustainability-linked loan for the purpose of the acquisition, development and operation by ACCIONA of the 36 MW Kwinana Waste to Energy project located 40km south of Perth, Western Australia.

Once completed, the Kwinana Waste to Energy project will generate 36 MW of electricity - enough to power up to 65,000 homes - and is expected to process in excess of 400,000 tonnes of waste annually.

Established under the ACCIONA Sustainable Impact Financing Framework and compliant with the Sustainability-Linked Loan Principles of the Loan Market Association, the loan includes sustainability targets for the ACCIONA group and links the interest rate payable with circular economy targets at the Kwinana plant.

BBVA and Intesa Sanpaolo acted as joint sustainability coordinators on the transaction and a syndicate of seven lenders comprising Banco de Sabadell, BBVA, CaixaBank, Deutsche Bank, Intesa Sanpaolo, Rabobank and Royal Bank of Canada are providing financing. NAB are acting as facility agent for the lenders.

Gerard Pike said, “We congratulate ACCIONA and its lenders on achieving financial close on this innovative financing for an Australian project. This transaction is an excellent example of ACCIONA’s leadership and innovation in the Australian energy market. We are seeing increasing appetite from international financial institutions for exposure to sustainable conscious financings in the Australian market and this financing builds on that trend.”

Herbert Smith Freehills’ team was led by Australian partner Gerard Pike, with support from senior associate Matthew Selth and solicitors Sara Ejtemai, Maria Nomikoudis and David Lim. A team from Herbert Smith Freehills in Madrid, led by partner Armando Garcia-Mendoza with support from associate Jose Maria Faz, provided advice on Spanish law aspects of the transaction.

Allens acted as legal adviser for ACCIONA.

The deal is another example of Herbert Smith Freehills’ market-leading work in sustainable financing, having also advised:

• ACEN Australia on a series of green loan facilities to fund its growing pipeline of renewable energy projects in Australia.
• QIC in relation to the acquisition of the Vector smart meters business, which included A$1.6 billion green loan and green capex facilities. The financing was the first Use of Proceeds Certification globally under the Climate Bonds Standard Version 4.0 and was the largest Climate Bonds Certified green bank loan aligned with the Climate Bonds’ Electrical Grids and Storage eligibility criteria at the time.
• ISPT Pty Ltd (ISPT) on the restructure of A$2.8b in bank facilities to sustainability linked loan facilities for its flagship fund, the ISPT Core Fund.
• AGL Energy Limited as borrower on its innovative A$600m sustainability-linked syndicated loan facility - the first of its kind issued by an Australian energy company in the Asia-Pacific region. The deal was awarded ‘Most Innovative Deal’ at FinanceAsia’s 2019 Achievement Awards in Australia and New Zealand.
• Celsus and its owners on the A$2.2 billion debt refinancing of the new Royal Adelaide Hospital Project. The project is the first operational infrastructure project in Australia to achieve a refinancing that is certified as compliant with both Green Loan Principles and Social Loan Principles.