Bord Gáis raises €342m to fund expansion

STATE ENERGY company Bord Gáis Éireann (BGÉ), has raised €342 million to fund its expansion plans. BGÉ supplies natural gas and electricity to homes and businesses and is building a €400 million-plus electricity generating plant in Cork.

The company announced yesterday that it has borrowed $450 million (€342 million) from a group of US institutions in a private placement. The loans are repayable over various periods ranging from four to 12 years.

In a statement, the company said that it will use the cash to “part-fund the company’s planned capital expenditure programme, including investment in power generation assets, and to refinance certain existing debt”.

Finance director Michael G O’Sullivan said yesterday that the company was pleased with the outcome and pricing of this round of fundraising.

“This is the first transaction executed on the US private placement market in 2009 for an Irish company and, given the current challenging credit market, reflects strong investor confidence in Bord Gáis’s business strategy and our ambitions for the future,” he said.

BGÉ is expanding its operations. The company is the State’s natural gas distributor, and owns the network through which the fuel is distributed. It provides 630,000 households and a large number of small businesses with natural gas.

It recently moved into the domestic electricity market, bringing it into competition with another State-owned enterprise, the ESB.

Along with the power plant it is building in Cork, it intends boosting its position in the electricity market through buying and building more generating capacity, particularly in the renewable sector.

Minister for Energy Eamon Ryan last year brought forward legislation increasing BGÉ’s borrowing limit to €3 billion from €1.7 billion. Mr Ryan and the Minister for Finance, Brian Lenihan, have to approve all major capital spending and borrowing by BGÉ.

Barclay’s Capital acted as sole placement agent on BGÉ’s US private placement.

The company last raised cash through a private placement in the US in 2003, when it borrowed $400 million.