When an energy supplier seeks access to outside capital, it usually goes to a bank.
When an energy supplier seeks access to outside capital, it usually goes to a bank. Typical forms of financing are taking out a loan or issuing a promissory note or bond via the capital markets. The role of banks in such situations is at least difficult. On the one hand you are a lender, on the other hand you should act as an objective advisor with regard to the optimization of the borrower's situation. HKCF Corporate Finance, on the other hand, acts as an independent financial advisor, free from conflicts of interest. Every energy supplier has its own needs and goals. The few listed companies in the German energy sector generally have broad access to the capital markets and debt financing is essentially a question of commercial terms. A municipal utility may have different needs and pursue different objectives. For example, the question of the source of financing or the link between the term and the depreciation period is just as important as the optimal design of financial covenants or long-term interest rate hedging. HKCF analyses - independently and without any interest in financing itself - the various options and advises municipal utilities on the best strategy. In addition, HKCF supports its clients not only in terms of the best and cheapest way of financing. The team structures and tranches the volume to be financed, opens and uses access to potential lenders (with whom the client may not be affiliated), organizes a competitive process and negotiates with lenders on behalf of the client to obtain the necessary debt funding from the most suitable source on the best possible terms. Public utilities that find themselves in financially "stressed situations" are also advised by HKCF. This consulting area focuses on changing the debt capital structure of the customer to avoid imminent payment defaults. On the basis of a developed financing model, HKCF analyses the current and future situation of the municipal utility and works out a range of solutions, such as the renegotiation of loan conditions up to a partial conversion of debt capital into equity. With its many years of expertise, HKCF thus controls the entire process or the discussions in different financing situations and thus supports the municipal utility in implementing its own objectives. Dietmar Rath, Partner at HKCF Corporate Finance GmbH