An investment of €5 million in the green senior unsecured fixed coupon corporate bond issued by UAB Atsinaujinaniios Energetikos Investicijos (AEI), an investment fund incorporated in Lithuania
The proceeds will be used to finance the development of wind projects located in Lithuania.
ETI score: 65
Competitive: the transaction will support the development by the company of new renewable energy capacity in Lithuania. This new capacity will help increasing the share of private generation and will facilitate further competition in the energy market.
Green: the transaction is 100 per cent GET and will contribute to climate mitigation through the addition of new wind and solar energy capacity. The Bank's proceeds of €5 million are expected to contribute to the increase of a minimum of 46MW of wind capacity in Lithuania, which will generate at least 124.5 GWh of electricity per annum. contributing to 37.6 thousand tonnes of CO2 savings per annum.
This transaction is a novel way of financing renewable energy companies in the Baltic countries, as it allows to raise structurally subordinated debt at the holdco level.
ATSINAUJINANCOS ENERGETIKOS INVESTICIJOS
UAB Atsinaujinaniios Energetikos Investicijos is a closed end investment fund incorporated in Lithuania with €60 million of capital raised to date. The fund is a regional renewable developer and independent power producer with an operating portfolio of 65.5MW of solar PV plants in Poland and a small 2.6MW solar PV plant in Lithuania and over 370MW solar and wind projects under development. AEI is managed by Lords LB Asset Management.
EBRD Finance Summary
The Transaction assumes an investment of €5 million in the senior unsecured, fixed coupon corporate green bond issued by AEI. The transaction represents 20 per cent of recently placed green bonds to be listed on the Nasdaq Vilnius Stock Exchange. This issuance is part of the larger €100 million green bond programme.
Total Project Cost
Financing structure: the EBRD financing is expected to support a successful book-building process.
Resource mobilisation: the EBRD's involvement in a debt capital market transaction provides comfort to other investors and further widens market participation.
Environmental and Social Summary
Categorised B (2019). Medium-High risk rating. Given the capital market transactions restrictions the Environment and Social Due Diligence ("ESDD") was undertaken in-house and included review of the terms and conditions, the Issuer's Green Financing Framework, Secondary Party Opinion ("SPO") available at Company's website (www.lordslb.lt/AEI_green_bonds), replies to the EBRD Supply Chain Questionnaire as well as an assessment of the Company's corporate environmental & social management systems and the review of publicly available documents. The SPO issued by Sustainalytics stated that AEI Green Bond Framework is credible and impactful, and aligns to the four core components of the Green Bond Principle published by International Capital Market Association (June 2021). Sustainalytics is of the opinion that AEI has adequate measures to identify, manage and mitigate environmental and social risks commonly associated with the eligible projects funded by the proceeds.
The Bank's use of proceeds will be for new wind capacity in Lithuania. A desktop study review was undertaken of the three most advanced projects, including the review of available environmental statements submitted as part of permitting process. The in-house preliminary review of these documents concluded that the local Environmental Impact Assessment ("EIA") process has/is being undertaken in line with National and EU law, and none of the wind farms are located in sensitive areas, such as Natura 2000 or near to residential areas. The EIA studies do not indicate any material impact on protected habitats or bird migratory routes. The competent authorities have issued positive permits for the development of these wind farms.
As part of the ESDD the Bank reviewed the Company's corporate ESG management with a particular focus on supply chain risks associated with the sourcing of solar PV panels. Overall, the Company has the institutional capacity to implement the Banks Performance Requirements. The Company will address supply chain risks via an update of its existing procurement policy and the development of specific contractor due diligence procedures by the Company.
The Environmental and Social Action Plan ("ESAP") contains requirements to adhere to the EU guidance on due diligence for businesses to address the risk of forced labour in their operations and supply chains (2021) and seek third party audits of the solar panels suppliers when it becomes possible. Additionally, the ESAP requires future projects to be subject of environmental and social risk assessment in terms of renewable site sensitivities, e.g. protected areas such as Natura 2000 sites, and follow the EU EIA process. The ESAP also requires that any new project undertake location specific ecological and birds and bats surveys are undertaken notably for any new windfarms, to assess resident species risk, migratory and general bird related risk, and ensure adequate mitigation is featured as part of the project designs. The ESAP incorporates requirements for the future reporting and monitoring of the portfolio performance via sustainability and ESG reports made public, and the Company will apply the EU Corporate Sustainability Reporting Directive (including provision of climate risk information) as well as report in accordance to the EU Taxonomy in the future reporting.
Technical Cooperation and Grant Financing
Company Contact Information
+370 5 261 94 70
PSD last updated
15 Dec 2021
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