AquaSure Cuts Debt Premium by 53% in A$3.7 Billion Refinancing

AquaSure Pty, the builder of a desalination plant in Australia’s Victoria state, is poised to more than halve its borrowing costs on A$3.7 billion ($3.5 billion) of loans backing the idled project, according to a person familiar with the matter.

The refinancing will cut interest margins to about 135 basis points more than the bank bill swap rate on three-year debt and about 165 basis points on money with a five-year maturity, said the person, asking not to be identified because the details are private. That compares with 350 basis points on a five-year loan AquaSure arranged in 2009 to build the plant, according to data compiled by Bloomberg.

John Ridley, a Melbourne-based spokesman for AquaSure, declined to comment on the financing today.

Victoria’s government said in February it was paying A$1.8 million a day to maintain the water facility. Since it was commissioned in 2007, the nation’s most prolonged drought has broken, leaving nearly dry dams in Victoria state almost full after floods and storms caused at least A$7 billion of insured losses and 40 deaths nationwide the past three years.

AquaSure was created to bid for the project in a group that included Suez Environnement Co., Europe’s second-largest water utility, its subsidiary Degremont SA, and construction company Thiess Pty to build and operate a plant capable of turning as much as 150 billion liters (39.6 billion gallons) of saltwater a year into potable water.

The Melbourne-based company, which is in partnership with the government, hired Macquarie Group Ltd. to advise on the refinancing, it said in July. Talks have been held with about 10 banks to provide the new debt, the person said today.

AquaSure had agreed a price increase on the original loan to 375 basis points after six years and 400 basis points, or 4 percentage points, after seven, a person said in 2009.

The company is also considering raising debt in the U.S. private placement market, the person said today.

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