the Hera Group is back on the market with the second "sustainability-linked bond" and the activation of a new "Sustainability-Linked Revolving Credit Facility" credit line. Overall, the group will allocate more than 1 billion euros of funding to projects in favor of the green transition. Hera announces it with a press release.
Hera: new 600 million convertible bond
In particular, the 600 million euros of the new one non-convertible bond loan are part of the multi-utility's sustainability strategy aimed at decarbonising and recycling plastics, while the new 450 million euro "Sustainability-Linked Revolving Credit Facility" - signed with the same group of banks and with the same indicators of performance – further expands the innovative financial products and instruments adopted by the company, helping to maintain its financial solidity.
The second "sustainability-linked bond" of the Group, with a duration of 10 years, has received strong interest from international investors with subscription requests for approximately 2,7 billion euro, 4,5 times higher than the amount offered. With the same group of banks that placed the bond loan and with the same performance indicators, a sustainable revolving credit line of 450 million euro.
Hera: how the new sustainable loans will be used
In particular, the 600 million euros of the new non-convertible bond loan are part of the sustainability strategy aimed at decarbonization and plastic recycling, while the new 450 million euro “Sustainability-Linked Revolving Credit Facility” line of credit further expands the innovative financial products and instruments adopted by the company, helping to maintain its financial solidity.
"Our second "sustainability-linked bond" and the new credit line reconfirm the Hera Group's commitment to sustainability, with particular reference to the objectives of carbon neutrality and the circular economy" - he says Horace Iacono, Chief Executive Officer of the Hera Group. “These new sustainability-linked tools will allow us to pursue with greater impetus two specific targets that are particularly relevant to us, which have seen us engaged for some time with projects for the reduction of the carbon footprint and the increase in the regeneration of plastic, in line with the strategies for the energy and environmental transition outlined in our business plan. This is an important contribution, which will lead us to achieve the objectives of the 2030 Agenda with concrete initiatives, to respond to the challenges we face every day".
The characteristics of Hera's second "sustainability-linked bond".
The total amount of the second sustainability-linked bond, reserved for qualified investors, which will be issued as part of the Hera Group's medium-term bond issue program (Euro Medium Term Notes Programme) is equal to 600 million euro, repayable after 10 years.
Also this second "sustainability-linked bond”, similarly to the one launched in 2021, has met with great interest. In fact, the operation saw a significant participation of international investors (France, Germany, Holland and Great Britain), mostly specialized in sustainable finance products. The strong demand, with subscription requests for approximately 2,7 billion euro equal to 4,5 times the offer, and the quality of the orders received have therefore made it possible to set the price at excellent levels.
One will be paid fixed rate annual coupon of 4,250%, while the yield at the time of issue is equal to 4,310%. Starting from the interest payment date of 2032, a possible step-up (interest rate increase) is foreseen in the event that the company does not achieve the objectives of (1) reduction of Green House Gas emissions measured in tons of CO2 (0,30% rate increase) and (2) increase in the amount of plastic recycled in thousands of tons (0,20% rate increase).
The "sustainability-linked bond" is part of the Hera Group's strategy aimed at reduction of greenhouse gas emissions and the increase in quantities of recycled plastic. In particular, the Hera Group aims to reduce greenhouse gas emissions by 37% by 2030 (compared to 2019), thanks to concrete internal actions and the involvement of suppliers and customers, in relation to the sale of electricity and gas: a one of the most ambitious goals for a company in Italy, validated by the prestigious international network Science Based Target initiative (SBTi).
As regards the second target, the multi-utility aims to increase the quantities of recycled plastic by 150% by 2030 (compared to 2017), also thanks to the approximately 1,2 billion investments envisaged in the environment sector in the 2022-2026 Business Plan . In particular, the subsidiary Aliplast, leader in the recycling of plastics, envisages new industrial development projects with investments of over 80 million euros, both to expand the plant engineering capacity in the segments already covered (recycled PET) and to broaden its range of action for the recovery of rigid plastics with a new plant. Located in Modena, and at the forefront at European level from a technological point of view, so much so that it has also received PNRR grants, it will make it possible to make even sectors that until now mainly use virgin materials such as consumer electronics increasingly sustainable.
The settlement date of the issue is scheduled for 20 April 2023 and the bonds will be listed, as of the issue date, on the regulated market of Euronext Dublin, on the regulated market of the Luxembourg Stock Exchange and, if applicable, at a later date , also on the ExtraMOT PRO multilateral trading system of Borsa Italiana. It is also expected that the sustainability-linked bond will be assigned a rating in line with that of Hera (rating Baa2 for Moody's and BBB+ for Standard & Poor's).
The new “Sustainability-Linked Revolving Credit Facility” credit line
The new credit line, in line with the one already issued in 2018, also provides for a reward mechanism linked to the achievement of specific environmental objectives. In fact, the same two performance indicators of the sustainability-linked bond were defined in the contract stipulated with the banks, by virtue of which the multi-utility will be able to benefit over time from more favorable rates.
The partners of the operation
The banks involved in the issue of Hera's sustainability-linked bond are BNP Paribas, Crédit Agricole CIB, Intesa Sanpaolo (IMI CIB Division), Mediobanca, Santander, UniCredit, BBVA, Banca Akros, Barclays, BPER Banca, CaixaBank , Deutsche Bank and MPS Capital Services. The lenders involved in Hera's sustainability-linked loan are BNP Paribas, Banca Nazionale del Lavoro, Crédit Agricole CIB, Intesa Sanpaolo, Mediobanca, Santander, UniCredit, BBVA, Banco BPM, Barclays, BPER Banca, CaixaBank, Deutsche Bank and MPS Capital Services. The law firm Legance Avvocati Associati assisted Hera both in relation to the "sustainability-linked bond" and the revolving credit line, while the law firms Linklaters and Gianni & Origoni respectively supported the placing banks of the "sustainability-linked bond". and the banks in the credit facility pool.
The Hera Group pioneer in sustainable finance
The first company in Italy to issue a green bond already in 2014, followed by two other "green" bonds in 2019 and 2022, and by the launch, in 2018, of the first sustainability-linked revolving credit line, Hera was also among the first Italian companies to issue a sustainability-linked bond, two years ago. The multi-utility thus continues to be a point of reference for sustainable finance at a national level and to integrate its financial strategies with constant attention to sustainability. In fact, precisely thanks to the use of innovative financial instruments that meet growing attention on the market, Hera supports its commitment to sustainable development.
