Hera Group: over 1 billion Euro for green transition, decarbonisation and plastic regeneration through sustainability-linked bond issue and facility agreement
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Strong interest of international investors for the second sustainability-linked bond of the multiutility, for an amount equal to Euro 600 million and a maturity of 10 years, which received subscription requests for about Euro 2.7 billion, 4.5 times higher than the amount offered. The company also entered into a Euro 450 million sustainable revolving credit facility with the same group of banks that placed the bond and with the same key performance indicators.
Two new achievements for the Hera Group, which is already a pioneer in this field in Italy: with the second “sustainability-linked bond” and the activation of a new “Sustainability-Linked Revolving Credit Facility”, the multiultility will allocate more than 1 billion Euro in financing to projects in favour of the green transition.
In particular, the Euro 600 million of the new non-convertible bond is part of the sustainability strategy aimed at decarbonising and recycling plastics, while the new Euro 450 million “Sustainability-Linked Revolving Credit Facility” further expands the innovative financial products and instruments adopted by the company, contributing to maintain its financial soundness.
"Our second “sustainability-linked bond” and the new credit line confirm the Hera Group's commitment to sustainability, with particular reference to the goals of carbon neutrality and circular economy”- states Orazio Iacono, CEO of the Hera Group. “These new sustainability-linked instruments will allow us to more actively pursue two specific targets that are particularly relevant to us, which we have been committed to for some time now with projects aimed at reducing our carbon footprint and increase plastic regeneration, in line with the energy and environmental transition strategies outlined in our business plan. This is an important contribution, which will lead us to reach the goals of the 2030 Agenda with concrete initiatives, to meet the challenges we face every day”.
The characteristics of the second “sustainability-linked bond”
The aggregate amount of the second “sustainability-linked bond”, reserved to qualified investors, to be issued under the company’s Euro Medium-Term Notes Programme – last updated on 12 April 2023 – is equal to Euro 600 million, repayable after 10 years.
Also this second “sustainability-linked bond”, like the one launched in 2021, met a great interest from international investors.
In fact, the transaction saw significant participation from international investors (France, Germany, the Netherlands and the United Kingdom), most of them specialised in sustainable finance products.
The strong demand, with subscription requests of approximately 2.7 billion euro, equal to 4.5 times the offer, and the quality of the orders received have therefore allowed the price to be set at excellent levels. The bond provides for an annual fixed-rate coupon of 4.250%, while the yield at the time of issue is 4.310%. Starting from the interest payment date of 2032, a possible step-up (interest rate increase) is foreseen in case the company does not reach the targets of (1) reduction of Green House Gas emissions expressed in CO2 tonnes (rate increase of 0.30%) and (2) increase in the amount of recycled plastic, expressed in thousands of tonnes (rate increase of 0.20%).
The sustainability-linked bond is part of the Hera Group’s strategy aimed at reducing greenhouse gas emissions and increasing the amount of recycled plastic. In particular, the Hera Group intends to reduce greenhouse gas emissions by 37% by 2030 (compared to 2019), thanks to concrete internal actions and to the involvement of suppliers and customers, in relation to the sale of electricity and gas: one of the most ambitious goals for a company in Italy, validated by the highly respected international network Science Based Target initiative (SBTi).
With respect to the second target, instead, the multiutility intends to increase the quantities of recycled plastic by 150% by 2030 (compared to 2017), also thanks to the approximately Euro 1.2 billion of investments planned in the environment sector in the 2022-2026 Business Plan. In particular, the subsidiary Aliplast, leader in plastics recycling, envisages new industrial development projects with investments of more than Euro 80 million, both to expand plant capacity in the segments already covered (recycled PET) and to extend its operations to the recovery of hard plastics with a new plant. Located in Modena, and at the forefront on a European level from a technological point of view, so much so that it has also received contributions from PNRR (the Italian “National Recovery and Resilience Plan”), the plant will allow to make more sustainable even the sectors that until now have mainly used virgin materials such as consumer electronics.
The settlement date of the issue is expected for 20 April 2023 and the notes will be listed, as of the issue date, on the regulated market of Euronext Dublin, on the regulated market of the Luxembourg Stock Exchange and, if appropriate, at a later stage, also on the ExtraMOT PRO multilateral trading system of Borsa Italiana. It is also expected that the sustainability-linked bond will be assigned a rating in line with the one assigned to Hera (rating Baa2 for Moody's and BBB+ for Standard & Poor's).
The new “Sustainability-Linked Revolving Credit Facility”
The new credit facility, in line with the one issued in 2018, includes a reward mechanism linked to the achievement of specific environmental objectives. In the agreement entered into with the banks, in fact, the same key performance indicators of the “sustainability-linked bond” have been defined, by virtue of which the multiutility will be able to benefit of more favourable rates over time.
Hera's partners in the transaction
The financial institutions involved in the issue of the “sustainability-linked bond” of Hera are BNP Paribas, Crédit Agricole CIB, Intesa Sanpaolo (Divisione IMI CIB), Mediobanca, Santander, UniCredit, BBVA, Banca Akros, Barclays, BPER Banca, CaixaBank, Deutsche Bank and MPS Capital Services. The financial institutions involved in Hera's sustainability-linked facility agreement are BNP Paribas, Banca Nazionale del Lavoro, Crédit Agricole CIB, Intesa Sanpaolo, Mediobanca, Santander, UniCredit, BBVA, Banco BPM, Barclays, BPER Banca, CaixaBank, Deutsche Bank and MPS Capital Services. Legance Avvocati Associati provided Hera with assistance in relation to both the “sustainability-linked bond” and the facility agreement, while the law firms Linklaters and Gianni & Origoni supported, respectively, the joint lead managers of the issuance and the banks of the credit facility.
The Hera Group as pioneer in sustainable finance
Hera, first company in Italy to issue a green bond in 2014, followed by two more "green" bonds in 2019 and 2022, and by the launch, in 2018, of the first sustainability-linked revolving credit facility, was also among the first Italian companies to issue a sustainability-linked bond, two years ago. The multiutility keeps to be a reference point for sustainable finance at national level and to integrate its financial strategies with a constant focus on sustainability. In fact, it is thanks to the use of innovative financial instruments that are attracting increasing attention on the market, that Hera supports its commitment to sustainable development.
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Quality, Safety and Environment: Hera Group confirms a solid protection in compliance with international standards
Perseverance and continuous improvement, also thanks to innovation: these are the most prominent features of the Hera Group’s commitment to applying best practices for ISO 9001 (quality management system), ISO 14001 (environmental management system) and ISO 45001 (occupational health and safety management system), applied, to the benefit of all interested parties, since 2000, 2007 and 2009 respectively.
This has been confirmed by Bureau Veritas Italia, after 131 days of audits in which the integrated management system of the Hera Group and its companies Heratech (which manages the technical-commercial and operational services linked to end users, plant engineering services and analysis laboratories), Inrete Distribuzione Energia (which manages natural gas and electricity distribution) and Uniflotte (dedicated to managing the company’s vehicle fleet) was scrutinised by a team of 15 independent auditors. This work was done from February to May of this year, sampling and analysing sites and corporate processes in the provinces of Modena, Ferrara, Bologna, Imola, Forlì Cesena, Ravenna and Rimini, all served by the Group.
This represents a significant commitment in terms of verification, directly proportional to the detailed management of Quality, Safety and Environment issues applied by the Group’s companies.
In addition to the certification models for quality, safety and the environment, Bureau Veritas also verified the compliance of Hera’s management system with the circular economy standard (AFNOR XP X30-901) and the compliance of Heratech’s management system with UNI/PdR 74:2019 (BIM planning).
The Bureau Veritas auditors particularly appreciated Hera’s commitment to sustainability through innovative projects, e.g., in the areas of photovoltaics and agrivoltaics, Green Gas or gas leak detection using predictive algorithms with the help of artificial intelligence.
Marcello Guerrini, Central Director of Corporate Services: “This provides further confirmation of the fact that, with the commitment and proactive attitude shown by our people, at all levels, and thanks to the stimuli provided by Bureau Veritas, we can create a virtuous cycle working towards sustainability for the area served, for our customers and suppliers, and for all stakeholders.”
Roberta Prati, Certification & Industry Director of Bureau Veritas Italia: “It is a source of pride to be able to contribute – with our audits – to the verification and continuous improvement of the processes that the Hera Group provides for the benefit of the community. It is precisely by addressing people and the environment that we find the correct, deep motivation that guides us in our daily activities.”
For more info:
Ufficio Stampa Bureau Veritas Italia: Star comunicazione in movimento, Barbara Gazzale, 348.4144780, www.starcomunicazione.com
Ufficio Stampa Gruppo Hera: Cecilia Bondioli - Responsabile Rapporti con i Media ed Editoria, 051.287595, cecilia.bondioli@gruppohera.it, www.gruppohera.it
Contacts
Telephone: +39 051 287111
HERA SPA
Viale Carlo Berti Pichat nr. 2/4 - 40127
Bologna
Contacts
Telephone: +39 051 287111
HERA SPA
Viale Carlo Berti Pichat nr. 2/4 - 40127
Bologna