Five banks are providing $300 million in senior secured credit facilities for two operating power blocks at Entegra Power Group’s natural gas-fired power plant in Gila River, Arizona.
WestLB AG’s New York branch, GE (NYSE: GE) and Union Bank acted as bookrunners, and together with BNP Paribas and CIT also served as joint lead arrangers. Union Bank, part of MUFG Power & Utilities, is serving as the administrative agent for the deal.
Recently, US Energy Secretary Steven Chu announced that his agency has finalized a $967 million loan, which will help fund the construction of the Agua Caliente Solar project in Arizona, a 290-megawatt photovoltaic solar generating facility that will use thin film solar panels.
The credit facilities – a six-year term loan and six-year revolver to be used for working capital and letters of credit – are for merchant power block 3 and contracted power block 4 of the Gila River Power Station, located in Gila Bend, 70 miles southwest of Phoenix. Each of the 536-megawatt power blocks, operating since 2003, uses two GE 7FA combined-cycle gas and GE steam turbines.
Gila River serves the Arizona, New Mexico, southern Nevada and southern California markets. The credit facilities support Gila River Power, LLC, wholly owned by Entegra. Entegra is using the credit facilities’ proceeds to repay debt and address general corporate purposes.
Mike Schuyler, Entegra’s president and chief executive officer, said: “This financing is an important component of Entegra’s value optimization program and demonstrates the market’s confidence in the company and its assets.”
Commented Martin Livingston, managing director in WestLB’s Global Energy group in New York: “In a market dominated by fully contracted new-build power plants, WestLB welcomed the chance to co-lead the Gila River financing with its significant merchant component.
“Not only are we willing to commit our own capital to such well-structured hybrid transactions, we continue to find that there is a strong core of lenders willing to provide liquidity to these transactions in broader syndications.”
“Our ability to lead-arrange and lend significant sums for merchant power plants, like one of the power blocks at Gila River, reflects our confidence in recovering electricity markets and ability to assess the underlying value of assets,” said Matt O’Connor, a managing director and leader of the Financial Institutions Group at GE Energy Financial Services, whose affiliate GE Capital Markets, Inc., acted as joint lead arranger.
Pascal Uttinger, a vice president in that group, said: “We are pleased to see this important transaction, which has both contracted and merchant revenue components, not only be well received but over-subscribed in the project finance bank market.”