Financing for Terra-Gen being relaunched with tougher covenants
Alexander Richter
13 Oct 2009
Citibank is relaunching the B loan holding company financing for ArcLight's Terra-Gen renewable subsidiary, which hit had been withdrawn in August of this year.
According to Project Finance, it seems like Citibank is relaunching the B loan holding company financing for ArcLight’s Terra-Gen renewable subsidiary, which hit had been withdrawn in August of this year.
The Terra-Gen Power portfolio consists of 831MW of renewables capacity – 387MW geothermal, 80MW solar and 364MW wind – that ArcLight bought from Caithness Energy in 2007.
Starting in the fall 2008, ArcLight has also contributed large amounts of equity to support capital expenditures at the geothermal assets. It has contributed approximately US$38.5 million into the accelerated capital improvement program designed to enhance Coso’s steam production and energy output, which had been gradually declining.
Terra-Gen’s significant ownership interests include Coso Geothermal Power (CGP). According to Reuters, CGP is ” special-purpose company formed to lease and operate the Coso project, which consists of three interlinked geothermal powerplants located in Inyo County, California. Coso provides royalty payments to the U.S. Navy and the BLM for use of the geothermal resources. Under a serious of PPAs, Coso’s entire output is being sold to Southern California Edison Company through January 2020. Cash flows from both Coso and Beowave, an affiliated geothermal project in Nevada, are available to service CGP’s rent payments under the CGP lease. Rent payments are the sole source of cash available to pay debt service on the pass-through trust certificates.”
The relaunched financing for Arc-Light’s Terra-Gen renewables holding company financing is notable for the imposition of project finance market norms on a deal once pitched to the institutional loan market. BNP Paribas has joined Citigroup, which pulled the first version of the financing in late July, lead arranger on the debt. The financing incorporates a number of changes to the structure, not least of them a much more rigorous control by banks of the holding structure.”
Coso Geothermal Power “is an indirect, wholly owned subsidiary of Terra-Gen Power, LLC (Terra-Gen), which in turn is a wholly owned subsidiary of ArcLight Energy Partners Fund III, LP and ArcLight Energy Partners Fund IV, LP (collectively, ArcLight).” (Source: Fitch)
Source: Project Finance, more details about the Coso Geothermal Field by GRC (pdf)
