Viridian injects €236m equity into its Republic unit

Northern Ireland energy supplier Viridian has injected €236 million of equity into its Republic unit as it continues to restructure its complex capital base under the new ownership of US investment firm I Squared Capital.

It is understood that the cash commitment to Viridian Power and Energy Holdings Ltd in Dublin, the ultimate parent of the group's Energia business in the Republic, was used to convert intra-group debt into equity as I Squared simplifies the group's structure.

The equity subscription took place on September 1st, according to filings with the Companies Registration Office.

The capital organisation of Viridian had grown very complicated under the group’s previous, almost decade-long ownership by Bahrain-based Arcapita Bank.

Arcapita, which bought the Belfast-based power company in 2006, filed for a US form of bankruptcy protection – known as Chapter 11 – in 2012, after talks with creditors over a syndicated loan failed. It emerged from bankruptcy a year later after receiving a $350 million (€312 million) loan from investment bank Goldman Sachs and put Viridian on the market late last year.

Junior loan

Immediately after taking over Viridian in April for a price understood to be in the region of €1 billion, New York-based I Squared pumped cash into the business to repay a £149 million (€176.4 million) high-cost junior loan. This facility carried a 13.5 per cent annual interest rate, according to a report by ratings agency Fitch.

Viridian’s latest quarterly report, published at the end of August, showed the group merged two entities, Viridian Group Investments Ltd (VGIL) and Viridian Group Holdings Ltd (VGHL), with the former entity surviving. As part of this transaction, VGHL extinguished a £399.6 million shareholder loan to VGIL.

All told, the group’s equity base rose to £319.5 million at the end of June from £120.6 million a year earlier. Net debt fell by almost £140 million to £515 million during the three months to the end of June.

The effects of the September 1st debt-for-equity swap are likely to be reflected in the company’s report for the current quarter, which will be published by the end of the year.

Revenue at Viridian fell to £286.7 million in the three months to June from £323.4 million for the year-earlier period, partly due to lower gas prices. Operating profit dipped to £22.1 million from £23.8 million.

The market rate, or yield, on Viridian’s €600 million of senior bonds jumped from 5.5 per cent to almost 6.3 per cent immediately after UK voters decided to quit the EU; it has since fallen back to 5.3 per cent.

I Squared has said it plans to grow the company by expanding its 20 per cent share of the Irish power market and by buying other businesses. It has also indicated it may use Viridian as a platform to make acquisitions in Britain.