E-Star Alternative Plc.’s bond issuance program
During recent years, domestic institutional and private investors have come to know E-Star Alternative Plc. as a new, dynamically growing participant in the energy sector. The significant growth in the value of the Company’s shares bears witness to the market’s appreciation of, and trust in, the Company. Our ownership structure has undergone a considerable transformation since 2007. Due to its business success and rapid market expansion, not only small investors, but also long-term investors and Hungary’s leading fund managers are increasingly turning their attention to the Company.
E-Star Alternative Plc.’s domestic and regional business expansion is built on the growing demand for district heating investments. E-Star is now a leading participant in the ESCO (“Energy Saving Company”) market for implementing energy efficiency projects in Hungary, and seeks to attain a similarly stable market position in Romania too, where it is already counted among the top three companies in its field on the basis of its ongoing projects.
In all cases, E-Star develops customised energy efficiency-boosting facilities and applies supplier-independent and technology-independent professional solutions. With a view to ensuring long-term sustainability, where possible, and rational, we base our developments on renewable energy sources.
E-Star Alternative Plc. has always typically financed its investments from the capital market and bank funding sources. In 2010 the growth in the number of projects, and in the size of their budgets, has in turn led to an increase in the number of banks financing the Company. The stated intention of E-Star’s management is to switch from project financing to corporate-level financing, with the credit line agreements announced this year representing another step towards the implementation of this strategy.
In 2007 the Company raised additional capital through a share offering. In the course of its regional expansion, however, E-Star also wishes to make use of other funding opportunities, in order to boost shareholder value without increasing the number of shares in circulation.
E-Star Alternative Plc.’s bond issuance program fits in with the management’s medium-term business strategy, and is in keeping with international standards and today’s financial and financing environment. The Company’s stock exchange presence also represents an additional guarantee for bond holders that they will always have access to details of the Company’s past, present and future operations.
The purpose of the corporate bond issue was, through the raising of additional funds, to contribute to the financing of E-Star’s heating and district heating supply projects in Romania, and to the diversification of its liabilities structure. The bond issue makes E-Star’s liquidity easier to plan, and could significantly accelerate the planning and implementation processes for new projects. E-Star has already won local-government district heating development projects in Romania, established two joint ventures with local authorities, and alongside its existing partnerships has a good chance of winning tenders in other towns. These contracts are not only for the modernisation of district heating systems, but also for the long-term operation and maintenance of the completed projects.
Since the heating networks in Romania often operate with greater heat-loss rates and at a higher cost than in Hungary, the chances of achieving energy efficiency gains are better, and thus the potential return is also greater.
Two tranches of our corporate bond program have been already closed. The first step was the issuance of the RFV2014/a bond in September 2010. It has been over-subscribed by 67%, in spite of the fact that the investors had only three days to subscribe (the minimum time period according to laws). A HUF 3.353.700.000 nominal value bonds have been issued.
The second tranche was issued in November 2010. The investors had two weeks to subscribe the bonds. During this period HUF 1.8 bln nominal value bonds have been subscribed. It has been appreciated as a remarkable success due to the current market conditions and indicated high honour of the investors.
We plan further tranches of our corporate bond program in Marc 2011.
