Yü Group bags £13m credit facility

Independent utilities supplier Yü Group has entered into a new structured trading agreement which will see it benefit from a variable credit facility of up to £13 million.

The Group will now purchase electricity and gas commodity at market competitive and transparent prices exclusively from SmartestEnergy.

Up to this point, the Nottingham-based Group relied on trading arrangements that enabled it to hedge its position through the forward purchase of energy commodity volume.

Such arrangements mitigated Yü Group’s risk but required the company to post cash collateral to support the forward contracts.

The Group’s new hedging facility with SmartestEnergy is structured so that the credit line grows in line with the business as it scales. This will reduce the firm’s working capital requirements, allowing it to drive growth and enhance shareholder value.

It is expected that the Group will transfer existing outstanding forward trades so that it releases the cash benefit of the agreement during FY 2020, up to an amount of £13 million.

Bobby Kalar, chief executive officer of Yü Group, said: “Traditional trading arrangements create significant cash collateral requirements in a declining energy commodity market, and overcoming this barrier was the main reason the business listed in 2016. Removing cash volatility with trading counterparties removes the need for the Group to ring fence cash.

“This agreement means we no longer have a need to tie up our cash and instead use our position to unlock new opportunities whilst scaling our customer base. Our industry has seen some turbulent times recently and this strategic partnership with Marubeni’s UK subsidiary SmartestEnergy supports the Company as it pursues its growth ambitions.

“I am delighted that we have concluded this new arrangement to unlock a multi-million cash benefit with such a well-respected strategic partner whose ambitions are in line with ours.”