Port of Newcastle’s ESG-Focused Refinancing

Allen & Overy advised Port of Newcastle on the deal. The lenders, agent and security trustee were assisted by Gilbert + Tobin.

The transaction included the introduction of a green loan and sustainability linked loan facilities.

Port of Newcastle has recently implemented a diversification plan to assist the Port to become more diverse in its revenue profile, to become more environmentally sustainable in its operations, and to enable it to invest in projects that support the long-term resilience of the economy of the Hunter region in New South Wales, and this syndicated facility is a key part of its transition process.

The $666 million refinancing package includes $515 million in “sustainability linked loans” with amounts to be utilised for purposes including keeping emissions in port operations below agreed levels, establishing an Indigenous student internship program and for screening suppliers for modern slavery risk, considered a world-first in aligning with the International Capital Market Association’s Climate Transition Finance Handbook, and $50 million in “green loans” for funding green building projects and initiatives in connection with the diversification of the port’s revenue base.

The refinancing and new facilities reflect the changing face of financing transactions for infrastructure assets participating in the commodity supply/export logistics chain.

Green loans developed out of the green bond market. Essentially, they represent a loan that is to be applied for the purpose of funding a specific environmental project/impact. A sustainability linked loan is a loan whereby the performance of the borrower is measured against certain agreed ESG KPIs, with that performance triggering certain outcomes (usually an adjustment to the margin).

PON is the largest deepwater port on the East Coast and provides a key gateway between key sectors of the Australian economy and global markets. Trade via the port is estimated to contribute about $26 billion to Australia’s national economy each year.

Sectors supported by the Port’s operations include agriculture, energy and minerals.

RBC Capital Markets acted as financial adviser to PON during the refinancing. NAB was the sustainability adviser.

The Allen & Overy team comprised financing partner James Abbott (Picture) with associates Catherine Dawson, William Khun and Kevin Lee.

The G+T team was led by Banking + Finance partners John Schembri and Stuart Cormack, supported by lawyer Travers Morony and graduate Catrina Chen.

Involved fees earner: James Abbott – Allen & Overy; Catherine Dawson – Allen & Overy; William Khun – Allen & Overy; Kevin Lee – Allen & Overy;

Law Firms: Allen & Overy;

Clients: Port of Newcastle;

Author: Sonia Carcano