- Contact is considering a Green Bond offer
- The proceeds will be used to finance its renewable energy projects
- Green bonds are usually issued to develop green projects and mitigate the impact of climate change
Contact Energy (NZX: CEN) announced on the NZX today that it was considering making a Green Bond offer of unsecured 5.5-year fixed rate bonds. Details of this would be announced on 27 September 2022. The offer will be for NZ’s retail and institutional investors.
Green Bonds are different from usual bonds as they use the proceeds in developing green projects or renewable energy projects, which help lessen the impact of climate change.
The company, which uses renewable resources to generate energy, also said that the offer would also open on 27 September.
Currently, no money has been sought or no Green Bond can be applied for until the offer is made.
Contact plans to use the proceeds of the offer for the financing and refinancing of renewable generation and other eligible green assets.
For this offer, the company has appointed Bank of New Zealand as Arranger and Joint Lead Manager.
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Contact’s decarbonisation efforts
As per the company release, in FY22, it made strong progress in leading New Zealand to decarbonisation. It connected the customers with its renewable energy development pipeline which includes:
- A NZ$300-million investment was approved to develop a new geothermal power station at Te Huka, near Taupo. This is likely to go onstream by 2024.
- Progress on Tauhara geothermal power station development. This power station is likely to supply around 3.5% of New Zealand’s total electricity demand by next year-end.
- Securing more land to develop wind projects through its Roaring40s partnership and entering into a JV with Lighsource bp to develop up to 200 MW from a solar plant.
- The ongoing strategic review of thermal assets supporting the announcement of the closure of the TE Rapa thermal plant next year.
- On track to more than half its scope 1 and 2 carbon emissions by 2026.
Contact’s FY22 financial performance
The company reported a net profit of NZ$182 million, down NZ$5 million from a year ago due to lower operating earnings (EBITDAF) and higher depreciation. The company’s EBITDAF was down NZ$16 million or 3% over pcp to NZ$537 million due to lower wholesale electricity prices, lower sales, and rising gas and carbon unit costs.
The Company paid a final dividend of 21 cps to its shareholders to be paid on 27 September. This makes the annual dividend payout for FY22 to be 35 cps, the same as previous year.
According to CEO, Mike Fuge, Contact faced several challenges for thermal fuel due to the ongoing Russia-Ukraine war. This gave a boost to its Contact26 strategy, which is about progress in renewable energy projects, he added.
Contact has many renewable energy projects in the development pipeline. The proceeds of the proposed green bond offer will help bolster Contact’s move towards decarbonisation, it company claimed in a sstatement.