AIM-listed Indian Energy, an independent power producer that owns and operates wind farms in India, has entered into a £2 million loan facility with its largest shareholder Utilico Emerging Markets Limited.
The loan facility, which may be drawn upon at the option of Indian Energy, bears interest of 10% per annum initially, rising to 12.5% from 1 January 2011, and is repayable by 31 July 2011. The firm will pay a commitment fee of 2.5% per annum of the principal amount and an arrangement fee of 2.5% on the amount of each drawdown.
As part of the arrangement, Utilico will be issued 3.4 million warrants at an exercise price of 70 pence per share, exercisable up to 30 June 2012. Utilico will also have the right to nominate a director to the board of the company while any amounts under the loan facility remain outstanding.
Utilico currently owns 5.1 million ordinary shares representing 20.51% of the firm and 1.8 million warrants to subscribe for ordinary shares at 125 pence per share.
Rupert Strachwitz, CEO of Indian Energy, said in a statement: "To have secured this facility from Utilico demonstrates the support we have for our business plan from our largest shareholder. We now look forward to being able to secure the next phase of projects with increased financial strength and a growing revenue stream."
The loan facility will enable the company to secure options over further wind projects in India as part of its strategy of expanding its operating portfolio from 41.3 MW at present to 300 MW by the end of its 2012-13 financial year besides general working capital.
Utilico Emerging Markets Limited targets investments in infrastructure, utility and related companies in emerging markets. Ingot Capital Management Pty Limited is the investment manager for the firm.