Point and Sandwick Trust have announced the successful refinancing of their award-winning Beinn Ghrideag project in the run-up to the community wind farm charity’s Annual General Meeting which will take place on Tuesday, November 19 at the Ionad Stoodie community centre in Point.
Calum MacDonald, the former MP for the Western Isles and the Development Manager behind the Beinn Ghrideag project, said: “Refinancing basically means swapping the old debt that was borrowed when the wind farm was built for new debt. The new loan is on better terms and it is consolidated into one loan instead of being divided between four loans as in the original financing package. This delivers a simpler and better deal for Point and Sandwick Trust and the community.
“The original debt deal of just under £14 million was done in 2014 and was used to finance the construction of the wind farm in 2015 and to see us through till the first usable revenues started to come in, which was not till 2016.
“Our major lender in 2014 was Santander Bank but we also had substantial loans from the Scottish Investment Bank and Social Investment Scotland. This latter debt is known as ‘junior debt’ and it is substantially more expensive than the main debt as the junior lenders don’t have the same security and protection from default that the main lender does.
“A major aim of this refinancing, therefore, was to consolidate and simplify the debt into one package which would be easier for us to manage as well as being cheaper.
“We engaged Johnston Carmichael Accountants in Edinburgh to scope out interested lenders as it is obviously beneficial for us to have a number of bidders competing against each other. We had a good number of bids come in and we engaged in further negotiation with the leading bidder to try and ensure the best possible terms. It is a long and difficult process to engage in but is worthwhile because 100 per cent of the benefit from the better terms will go back into the islands community through all the excellent community projects and organisations that we are proud to be able to help.
“In the end, we were very happy to agree terms again with Santander Bank, the same bank that had backed us in 2014. They were competitive in their bid and we know each other pretty well by now, so that makes it easier to build the relationship.
“With the new consolidated loan from Santander we have been able to pay off the original junior lenders, Scottish Investment Bank and Social Investment Scotland. We are very grateful to both of them for stepping in when we needed them in 2014 and providing the junior debt. This kind of junior debt support is of crucial importance to community-owned energy projects as it ensures that all the profits go back into the community rather than being diverted to equity investors.
“The successful refinancing of our capital debt marks a major milestone for the project and the wide interest from lenders is testimony to the stability that the business has achieved and it will allow us to build on that success for decades to come.”
A number of other reports will also be presented to the AGM including an update on the LED Energy Communities project in Point and Sandwick, updates on the development of the SWIFTH2 Hydrogen Ferry project and research into battery storage, the appointment of new directors, cheque handovers and the announcement of future investments.
Point and Sandwick Trust Chairman Norman Mackenzie said it had “been a good year”, adding: “We’ve been able to maintain all our commitments to our priority clients as well as maintaining payments to community groups. It was also a year when we received national recognition, winning the UK Environmental Social Enterprise of the Year award at the UK Social Enterprise Awards last November. That was great recognition of the quality of our organisation and the work we do.
“We’ve now gone through refinancing the whole project and can look forward to being on a strong footing for the future.”
The Annual General Meeting begins at 8pm and will last until approximately 9.30pm. Everyone is welcome to attend and refreshments will be provided.
Pictures: Point and Sandwick Trust’s Beinn Ghrideag wind farm by Sandie Maciver of SandiePhotos (please credit)