Business utilities supplier Yü Group has struck a hedging agreement with Smartest Energy in order to free up cash.
Under the deal, Yü will only buy energy from Smartest and will receive a £13m variable credit facility in return. It will transfer outstanding forward trades in order to unlock that cash benefit over 2020.
“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,” said Yü Group CEO, Bobby Kalar.
“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.”
Yü Group’s shares soared on the announcement, though remain less than a tenth of their 2018 peak.