Bazalgette Finance plc has announced that Bazalgette Tunnel Ltd, the company responsible for the construction of the Thames Tideway Tunnel, has signed an agreement with four institutional investors from the US for the placement of £300 million notes with maturity date 2032.
The placement will fund in September 2017 and will be used for general corporate purposes.
The placement is Tideway's first issue in the US Private Placement (USPP) market and allows Tideway to raise financing at attractive rates, while diversifying its sources of funding to a new investor base.
The placement will further strengthen the company's liquidity position, which at 31 March 2017 included £316 million in cash, £348million outstanding funds committed by its shareholders, an undrawn £1 billion RCF, and £1.15 billion of RPI-linked long-term financing with deferred drawing dates.
Since April 2017 Tideway has also signed a £100 million loan and a £125 million bond, both linked to RPI and with deferred drawing dates, in addition to the new £300 million US private placement.
Linked to the Retail Price Index, the bond matures in 2049. Listed on the London Stock Exchange, the bond has a deferred purchase date of July 2019. The company will use the proceeds to finance the design, construction, management, operation, maintenance and other expenditure (including fees and incidental costs and expenses. It will also be used to refinance any existing or future indebtedness relating to the TTT.
In May 2016, Bazalgette Tunnel Ld also closed a £700 million 35-year loan with the European Investment Bank, the EIB’s largest-ever water sector loan, to finance the construction works.
Mark Corben, Chief Financial Officer of Tideway, commented:
"We are delighted that the significant progress made by the company over the last year is recognised by investors in new markets. This placement marks a significant step forward in de-risking the financing of our investment programme, as we now have secured approximately two thirds of our long-term financing needs to the end of construction, and it sets a benchmark for future issuance."
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