Crown Irrigation has provided Central Plains Water Limited with a $65million secured loan
13 December 2016 | Author: Murray Gribben
13 December 2016
Crown Irrigation has provided Central Plains Water Limited (Central Plains) with a $65million secured loan to part-fund Stage 2 of the Central Plains Water Enhancement Scheme
Crown Irrigation Investments Limited (Crown Irrigation) has announced it has reached financial close to invest in Stage 2 of the Central Plains Water Enhancement Scheme (CPWES).
This investment follows the repayment in full of Crown Irrigation's $6.5million investment in Stage 1.
Under the agreement, Crown Irrigation will provide $65million of subordinated debt finance to support the construction of excess capacity to be built during Stage 2; ultimately adding a further 20,000 hectares to the scheme's existing capacity.
Stage 2 of the scheme will initially service 15,409 hectares on the Canterbury Plains. Of the 15,409 shares issued, a number have been sold to current groundwater irrigators. Using the Scheme's alpine sourced water, rather than the ground water, is environmentally beneficial for Canterbury and it is expected to result in reduced pressure on the aquifers, which is required to replenish flows in the lowland streams.
The terms have been agreed and the transaction has been subject to comprehensive due diligence by Crown Irrigation to ensure all conditions are now satisfied.
The CPWES is important to support sustainable growth in the Canterbury region and protect water quality. Once completed, Stages 1 and 2 of the scheme will distribute reliable alpine water to approximately 40,000 hectares of land on the Canterbury Plains and will continue to contribute to the economic growth of the Canterbury region through a boost in direct and indirect agricultural output.
A recent report estimates that the economic benefits to be released from the project will be up to $374million.
Crown Irrigation's partial funding of Stage 2 means that the project can continue to be built for the long-term demand, not just the immediate or short term demand. Economies of scale are such that without Crown Irrigation's investment, the project would probably not have gone ahead.
Construction of Stage 2 is expected to be completed in September 2018.
Crown Irrigation's Constitution
Crown Irrigation's mandate is to enable the development and construction of off-farm regional irrigation infrastructure where the company identifies irrigation scheme proposals that have the potential to generate long-term economic benefits from irrigation for New Zealand
Crown Irrigation achieves this goal by:
- Co-investing in irrigation schemes;
- Providing grants to irrigation schemes in development; and
- Applying commercial expertise and leadership to irrigation schemes
When co-investing, as is the case with CPW Stage 2, Crown Irrigation does not invest in irrigation schemes where alternative investment is available; does not seek a controlling interest; seeks to exit its investment as the scheme becomes commercially viable; seeks to minimise the impact on the Company from any investment it makes on non-commercial terms; and seeks to use best practice investment management approaches.
For more information contact:
Murray Gribben 021 126 8682