EnergyAustralia, a power retailer, finally gained as much as A$1bn loan recently for its liquidity. It was happening after meeting margin calls on forward energy hedges. In this moment, the borrower also gained more external credit facilities complete with the internal short-term shareholder loan. The firm is confident that it would surely ensure its liquidity position. This information refers to the CLP Holdings from its Hong Kong parent.
CLP Holdings in this case, argues that they expect the short-term to battle liquidity challenges. They have stated this as a financial result for the first half. Previously, the power retailer, EnergyAustralia, had encountered a loss in 2022 of HK$8.6bn. This was due to the rising price in wholesale energy that was higher than the energy hedging contracts.
This becomes the reason why the power retailer attempts to replenish its HK$7.957.bn loss to deal with the contracts. Based on many sources, the company could cover the loss by reducing its biggest output in power stations after power supply. The high fuel costs are also another trigger leading to more challenges in the upcoming year.
In July this year, there were also other challenges. S&P had downgraded EnergyAustralia rating from BBB+ to BBB-. The negative outlook presented, so the company needed to revise its assessment especially in the liquidity. S&P argued that in the last two months high pricing in the next contract would force EnergyAustralia to reassess its liquidity. In addition S&P analyzed that EnergyAustralia faced the calls by drawing down its syndicated facilities for as much as A$750. They also drew the working capital facility as well as the short-term funding from its parent which is CLP Holdings.