rock14 Jan 2015 06:47
SFU is right and he said it in a couple of lines, lets see how many I use to explain the same thing.
Rame own 100% of the subsidiaries that are set up to house a wind project, Rame then set about getting all the necessary permissions granted so that the project can go ahead. They then look to sell a stake in the subsidiary to help finance the project which obviously brings an instant income hit for Rame.
Using the 15 MW project as an example
Rame owned 100% of the two subsidiaries that make up the 15MW project, they got all the necessary permissions and then they sold 80% of the subsidiaries to Santander who are then responsible for putting together the debt funding needed to finance the project, the balance of the funding needed after the debt part is secured is provided by the two partners, Santander put up 80% of the balance and Rame the other 20%
Some figures for the 15 MW project ……….. Santander paid Rame $772k to acquired an 80% interest in the 15 MW project ($51,467 a MW), the total cost of the 15 MW project seems to be about $38m, which is comprised of $27.6m of debt at 6% interest over a 16 year term with the balance of $10.4m made up by the equity partners (Santander & Rame), Rames 20% should have cost about $2m.
The 15 MW project is expected to throw off between $1.5m and $1.75m of FREE CASH when it is up and running and it should be up and running any time now ……. that’s one bit of news we are waiting for.
Moving on to the next 118 MW which is waiting for Santander to complete their due diligence (actually 9 MW of that is already to start), if the due diligence is completed satisfactorily then Santander will buy their stake in the project from Rame and using the same formula as above it would mean an instant cash injection to Rame of around $6m ……. this is another one of the bits of news we are waiting for.
Long winded I know, but I like a good waffle ……..
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