Engineering and consultancy firm Wood has secured a loan from a group of global banks, in a deal backed by UK Export Finance’s (UKEF’s) first ever green transition export development guarantee (EDG).
As part of the deal signed in late July, UKEF will provide 80% cover for the £430mn commercial loan, with the financing helping Wood capitalise on clean energy, hydrogen and decarbonisation opportunities.
This includes providing working capital for deployment in clean growth projects globally, and putting in place funding for Wood’s research and development in clean growth sectors.
The facility was co-ordinated jointly by BNP Paribas and Citi, which also acted as facility agent on the deal.
ABN Amro, BNP Paribas, Citi, HSBC UK, Lloyds Bank and RBS all served as mandated lead arrangers.
According to UKEF, as part of the deal, Wood has committed to increasing its green portfolio and significantly reducing its greenhouse gas emissions over the five-year tenure of the facility.
It adds that third-party consultant CRISIL, part of the wider S&P Global group, has been tasked with assessing the credibility of Wood’s clean growth plan and carbon reduction targets.
UKEF announced the launch of the transition EDG earlier this year amid concerns in the fossil fuel industry over the government’s decision to end support for the sector by March 31.
In a consultation run in the months leading up to the cut-off date, fossil fuel industry respondents had called for more time to shift their operations towards cleaner energy sources.
Companies warned that the sudden withdrawal of state support could hurt firms throughout the supply chain, with many already struggling from the effects of Covid-19, as well as low oil and gas prices.
But with large oil and gas companies expected to benefit from the transition EDG, analysts have warned that a “close eye” must be kept on the fledgling product.
Adam McGibbon, formerly senior climate campaigner at campaign group Global Witness, urged the government in a report last year to halt fossil fuel funding overseas.
Speaking about the new transition EDG, he previously told GTR: “There’s a role for funding a transition of big oil and gas companies away from fossil fuels, but it has to be a real transition – and that means an end to all extraction of fossil fuels on a timeline consistent with what scientists and the IEA [International Energy Agency] tell us.”
The UK government has said it is committed to growing the country’s low carbon goods and services exports in the coming years.
“Green trade presents a major economic opportunity for Britain that will drive high-value jobs in every part of the nation,” says UK trade secretary, Liz Truss.
“Wood has already made great strides in repositioning its business for a low-carbon future. I am delighted it is the first company to energise its clean growth plans using UKEF’s new transition export development guarantee, which will support thousands of green jobs,” she adds.