Last week, Bonheur ASA successfully completed a new senior unsecured green bond issue of NOK 700 million maturing in September 2025. Oversubscribed, the bonds were priced at three-month NIBOR + 275 bps and may be tapped up to a maximum amount of NOK 1 billion. Net proceeds from the issue will be used in accordance with the company’s Green Bond Framework. The framework will cover potential issuances of new Green Bonds and Green Loans in the group which will finance and refinance projects that are in line with the Green Project criteria, specifically those that, in whole or in part, promote the transition towards low-carbon and climate resilient development. Under this framework, Green Projects will be linked to investments in renewable energy projects and offshore wind vessels and related equipment. Details of the offering are shown below in the Guts of the Deal.
Demand for the bonds was strong with the books covered by indications of interest at NOK 600 million in the initial price talk range of three-month NIBOR + 275-300 bps. As the day progressed, the books built above NOK 1 billion with the guidance tightened to +275-290 bps. When the books closed, the first tranche was fixed at NOK 700 million with the spread set at the tight end of the range. Listed on the Oslo Stock Exchange since 1920, Bonheur is an investment holding company, whose day-to-day operations are managed by Fred. Olsen & Co. Over the years, Bonheur’s investments have evolved and become over recent years more focused on its green footprint. Today the majority of Bonheur’s investments are withing renewable energy (wind farms) and shipping/offshore wind segments (offshore wind services). A leading renewable energy player, Bonheur was an early mover into wind energy, with its first investment made in 1996. The company has majority ownership interests in 11 onshore wind farms, of which nine are located in Scotland, and two in Scandinavia. At end-Q2 2020, total installed capacity was 679MW. The wind farm portfolio also includes 105MW under construction in Sweden, consents for an additional 295MW onshore in Sweden and Norway, and 50% of the consented offshore wind project Codling, of approximately 1000MW in total. The company is present in all parts of the energy value chain including site investigation, development, construction, operation, and decommissioning. The shipping/offshore wind division primarily consists of three jack-up vessels used for the transportation and installation of offshore wind turbines, as well as subsidiaries supplying qualified and skilled personnel to the global wind turbine industry. The company has a global footprint in Europe, the U.S. and Taiwan and has installed approximately 21% of all offshore wind turbines since 2013. The cruise division owns and operates six cruise ships, in addition to operating a river cruise from April to October. Built in the 1970s, 1990s and one in 2000, the vessels have an overall berth capacity of approximately 6,700 passengers. The regular cruises operate out of five ports in the U.K. (Dover, Liverpool, Newcastle, Southampton and Edinburgh in Scotland), while the river cruise operates on the Rhine, Danube, Moselle, and Main rivers. During the quarter, all four cruise ships have been in lay-up due to Covid-19. DNB’s Shawn Courcelles highlights some key credit considerations:
Bonheur reported cash of NOK 3,543 million at the parent company level, which exceeds gross adjusted debt.
DNB estimates a net asset value (NAV) of NOK8.3bn for Bonheur, which corresponds to a 74% value-adjusted equity ratio. Bonheur has an equity market capitalization of NOK10.1bn, which is NOK1.8n (21%) above our estimated NAV.
Liquid investments represent 36% of our estimated NOK11.3bn gross asset value (GAV), of which 32% is in cash while the remaining 4% is in liquid financial investments in shares and bonds. 61% of our estimated GAV comes from investments in subsidiaries, with renewable energy accounting for 31%, shipping/offshore wind for 22%, cruise for 7%, and NHST for 1%.
DNB Markets and SpareBank1 Markets acted as joint lead managers in connection with the placement of the new bond issue, with the former also serving as the green bond advisor. This article is excerpted from: Freshly Minted September 17, 2020 SEPTEMBER 2020 VOLUME # 20 ISSUE # 37