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H2 Green Steel raises debt financing and additional equity

The company has signed debt financing of €4.2bn and added new shareholders Microsoft Climate Innovation Fund, Mubea and Siemens Financial Services.

H2 Green Steel has signed debt financing of €4.2bn, added equity of close to €300m and been awarded a €250m grant from the Innovation Fund.

Funding amounts to €6.5 billion in total for the green steel project in Boden, Sweden, on which construction has already commenced. supply contracts for the hydrogen-, iron- and steel equipment are in place. A large portion of the electricity needed has been secured in long-term power purchase agreements, and half of the initial yearly volumes of 2.5 million tonnes of near zero steel have been sold in binding five- to seven-year customer agreements, according to a news release.

H2 Green Steel has signed definitive financing documentation for €3.5bn in senior debt and an up-to-€600m junior debt facility:

  • Consistent with project financings, international banks providing the senior debt will be lending in part under cover provided by Riksgälden (Swedish National Debt Office), as a green credit guarantee and Euler Hermes as an export credit cover for €1.2bn each. The guarantees cover 80% and 95% of the loan amount respectively, and are provided in accordance with market pricing.
  • The group of over 20 lenders includes Svensk Exportkredit (SEK) and the European Investment Bank together with commercial banks, led by BNP Paribas, ING, KfW IPEX-Bank, Societe Generale and UniCredit.
  • The junior debt consortium is led by AIP Management and comprises European and international investment banks and funds.

H2 Green Steel has also raised close to €300m more from investors, bringing the equity in the project to a total of €2.1 billion. New shareholders include Microsoft Climate Innovation Fund, Mubea and Siemens Financial Services. Additionally, IMAS Foundation and Just Climate are some of the existing shareholders which are increasing their investments in H2 Green Steel.

In September 2023, H2 Green Steel announced it had raised €1.5bn in equity, making it the largest private placement round in 2023 in Europe. Before that, the company closed its series A equity round of €86m in May 2021 and announced the close of its series B1 round of €260m in October 2022.

H2 Green Steel has also signed a €250m grant agreement under the Innovation Fund through the European Climate, Infrastructure and Environment Executive Agency (CINEA). The Innovation Fund is financed by the European Union’s Emissions Trading System and supports innovative projects that aim to speed up decarbonization of European industry and accelerate the green transition.

“No one has scrutinized our project more thoroughly than those who back our financing. This massive commitment from our lenders, investors and the Innovation Fund is true recognition of the quality of our company. It’s also a big win for the climate as we hope the model will inspire the financing of other decarbonization initiatives in hard-to-abate industries,” says Henrik Henriksson, CEO of H2 Green Steel.

Legal and financial advisors to H2 Green Steel include Milbank, Mannheimer Swartling, Societe Generale and KfW IPEX-Bank.

Morgan Stanley acts as equity advisor to H2 Green Steel.

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