EDPR says debt to grow, but not tapping market

By Andrei Khalip and Sergio Goncalves

LISBON (Reuters) - Portugal's wind power company EDP Renewables (EDPR) (EDPR.LS) will see its debt rise as it invests heavily in growth, but the company does not plan to tap the debt market, Chief Financial Officer Rui Teixeira said on Thursday.

Speaking at the Reuters Latin American Investment Summit, Teixeira said most of the money would continue to come from mother company Energias de Portugal (EDP.LS), while EDPR was also mulling several project finance schemes in Europe and hoping to benefit from cash grants under the U.S. Stimulus Bill.

He said the debt was likely to rise this year from the first quarter's roughly 3 times EBITDA, but will not attain 5 times, which the world's fourth-largest wind power company considers a "comfortable" limit for indebtedness.

"The investment is still much higher than cash-flow, so naturally the 2009 debt will rise," he said. "(But) we do not ponder the debt market at all."

The capacities considered for project finance, a scheme where a separate entity is set up for a concrete project, include two projects capable of generating 120 megawatts each and one with a 70 megawatt capacity, he said.

These plans involve Poland and possibly Belgium and Spain.

He said the U.S. Stimulus Bill, which is expected to come into effect in July, could finance 30 percent of its investment in the United States, and the company was considering speeding up some projects to benefit from cash grants and tax credits under the bill.

"It gives us access to liquidity and lowers investment capital costs. But it's not that we'll seek to double our capacity just to take advantage of this bill. We are working within the logic of an international portfolio."

Teixeira said overall debt costs, which are at 4.6 percent, should stay in the range of 4.5-5 percent this year.

Contradicting some analysts' estimates that EDPR had already posted its best quarterly result this year in the first quarter, Teixeira said net profit could still grow in April-June from the preceding three-month period.

"It's possible the profit will no longer rise by 87 percent (from a year earlier), but it does not mean that it won't rise in the second quarter from the previous quarter," he said.

"Excluding the seasonal effect, my guess is that second-quarter EBITDA will be higher than in the first quarter of 2009 and I think it will clearly be higher than in the second quarter of 2008," he said.

Overall, EDPR plans to add between 1,200 megawatts and 1,300 megawatts in capacity this year, most of it in the second half of the year. Teixeira said the plan was well on track for fulfillment, but the new capacity would only fully contribute to earnings churn out next year.

Speaking of Brazil, where EDPR has a small 14 MW capacity, Teixeira said the country's energy sector regulation was still unfavorable for wind power, despite some of the highest load factors in the world, but expected changes to occur over the next few years, which may allow larger-scale investment.

In the meantime, EDPR is planning to take part, alone or in partnership with a Brazilian firm, in the first wind power auction tentatively scheduled for November.