BGL has issued A$35.1m in new equity to Zenith Energy to cover the pre-payment commitment of the 15-year power purchase agreement. This payment was a surprise to Argonaut as we had included only annual lease payments in our forecasts over the 15-year term, not a large upfront prepayment. Incorporating the placement drives a 3% cut to our price target to A$1.50 and we reiterate our HOLD rating on BGL, although we note there is likely some upside to our earnings forecasts through lower power costs that we suspect would have been secured by BGL in return for the upfront pre-payment.
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