Viridian's borrowing costs set to double
The borrowing costs of Viridian, parent company of electricity supply and billing firm Power NI, look set to double when it sells bonds this week.
The planned bond deal is reckoned to be the biggest ever for a Northern Ireland company.
Viridian, which also owns the Huntstown Power Plant in Dublin, could pay lenders a yield of 12% to tap the bond markets, according to price guidance circulated to potential investors on Wednesday.
Belfast-based Viridian is looking to raise £405m through the bond markets.
Viridian is owned by Arcapita, a Bahrain-based investment fund that is also seeking to refinance its own loans, according to a report in the Financial Times.
The deal is being done in order to ease the company's debt burden by replacing short term loans with the longer term bond debt.
A deal is expected to close this week.
Market sources said the yield or interest on planned five-year bonds will be between 11.75% and 12%. That is twice the 5.5% interest that the company currently pays to banks for loans that will fall due later this year.
The bond deal is part of ongoing efforts to deal with Viridian's huge debt burden. It has weighed on the company since it was acquired by Bahraini investor Arcapita in 2007. Last year Viridian sold its main electricity business, Northern Ireland Electricity (NIE) to the ESB in a £1bn deal.
Since then lenders including Deutsche Bank, RBS and UBS have already extended the term of their loans in order to allow time to complete a bond deal, in exchange for higher interest charges.
All three are involved in the effort to place the planned bond.
It emerged last week that Viridian's wind farm assets have been put up for sale, reckoned to be worth as much as €200m (£167m).
The company has been involved in ongoing talks with lenders over the past two years aimed at reducing and rescheduling debts. Talks have taken place before and since the ESB sale.
The amount Viridian sold Northern Ireland Electricity to ESB for