Bord na Móna raises $205m in US to fund expansion

STATE COMPANY Bord na Móna has raised almost €150 million from US financial institutions to fund its expansion into the energy and waste businesses.

The company said yesterday it had borrowed $205 million (€146 million) through a bond issue to US insurers and pension funds. The backers included the US arm of multinational insurance giant Aviva and Teachers, a pension fund that provides retirement benefits for teachers in the US, and one of the biggest such funds in the country.

The money is due for repayment over an average of eight years. Bord na Móna chief financial officer Michael Barry said yesterday maturity dates ranged from five to 10 years.

The company did not reveal the interest rate at which it is borrowing the money, though it is between two and three times the rate it is paying on similar bonds issued in 2006.

Mr Barry said the company intended to raise $100 million but the response to its initial approaches was positive enough to warrant seeking double that amount. The offer was oversubscribed by three to one.

He said the US institutions were well informed about the Republic and the issues facing the banking system and economy.

“We had to deal with the sovereignty issue and we had to explain about the steps being taken to deal with the banking crisis,” he said. “People accepted that Ireland is going to get through this.”

Mr Barry added that the State ownership of Bord na Móna helped. It is the third such company to borrow money from US institutions this year. In July, the ESB raised €365 million, while Bord Gáis raised €550 million in June.

Mr Barry said Irish banks were only prepared to lend money for up to three years.

Bord na Móna will use the money to fund the development of the first phase of a €500 million wind farm at Oweninny, Co Mayo, which it is building in partnership with the ESB. Initially it will install 100 megawatts of a total 360 megawatts, which will make it Europe’s biggest onshore wind farm.

It is also spending €60 million on two “peaking” plants. These are small electricity generators which can be turned on to boost supply during periods when demand is high. It has already signed a contract with British-based Pratt Whitney for the plants.

It will use some of the cash to fund research and development into the conversion of green waste into fertilizer.

Barclays Bank, which advised Bord na Móna, has acted as adviser on deals that have raised a total of $1.2 billion for Irish companies in the US to date.

Helen Kelly, commercial director at Barclays Ireland, said the bank was committed to supporting Irish companies’ growth strategies.