A lignite revolver? New EPH loan deal comment

3 minute read

We view a recent EPH €1 billion loan deal as effective coal funding, which should be of concern for the involved banks. We also provide some background and details on the structure of the deal.

In this report we provide a short introduction to the term loans and revolving credit facilities (RCFs, or, “revolvers”) for the non-credit community, given the announcement of Energeticky a Prumyslovy Holding AS (EPEN) that it has signed the €1 billion financing with group of international banks.

The question is whether the new EPEN loans and facility constitute coal/lignite financing. We note the split of EPEN into two main parts: EP Infrastructure (EPIF) and EP Power Europe (EPPE). EPIF operates mainly various fossil gas operations. EPIF is raising debt for its operations on the subsidiary level which makes sense as EPIF with its gas operations thus can avoid being targeted for coal investment exclusion criteria. In contrast, we note that 100% owned and coal rich EPPE is not raising debt under its own ticker.

This leads us to the conclusion that EPEN funding is mainly injected into EPPE. Following this, we believe that the loan deals are likely to be intended for EPPE, and thus the stakeholders in the deal are engaging in coal/lignite financing.

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