Editor's note: This article has been updated to identify
the counterparty of the project's heat rate call option.
The owner of a gas-fired project in Texas has hired an
investment bank to run a sale process for the asset,
PFR has learned.
Guggenheim Partners sent a teaser to
potential buyers for the 330 MW Ector County peaking plant this
week, says a deal watcher.
The facility is owned by Invenergy through
its Invenergy Thermal Operating I subsidiary
and is part of the collateral for the project finance
vehicle’s $410 million term loan B package.
The sale of the project would be permitted under the terms
of the loans, subject to certain conditions such as a rating
affirmation and the repayment of a certain amount of the debt,
says a person familiar with the terms. The majority of
Invenergy Thermal Operating I's unencumbered cash flows are
generated by its 584 MW Nelson project in Illinois, the person
Last year, Invenergy entered into a five-year heat rate call
option for Ector’s entire capacity, according to a
report issued by Moody’s Investors
Service on Nov. 13.
The hedge is expected to guarantee the project some $6
million of cash flows, but deal watchers note that it has also
limited the project's ability to capitalize on a recent
resurgence in Texas power prices.
Direct Energy is the hedge counterparty, a
deal watcher tells PFR. A spokesperson for Direct
Energy declined to comment. Direct Energy's British parent
company Centrica is rated Baa1 and BBB+ by
Moody's and S&P Global Ratings,
About $312 million was outstanding under the $340 million
term loan B, which matures in 2022, at the time of the report.
The package also includes a $70 million first lien revolving
credit facility that matures in 2020.
Moody’s affirmed the senior secured term
loan’s B1 rating in the November report. It also
has a B rating from S&P Global
Additional leverage is provided to Invenergy Thermal
Operating I in the form of an unrated, second lien term loan C
from AMP Capital, of which $204.7 was
outstanding at the time of the Moody’s report.
Invenergy sealed the B and C loans in October 2015, in a
deal led by Morgan Stanley (
There is also some $403.5 million of unrated project-level
debt spread across the contracted assets in the 2.5 GW,
six-project Invenergy Thermal Operating I portfolio, but a deal
watcher tells PFR that Ector itself is
unencumbered at the project level.
A spokesperson for Invenergy in Chicago declined to comment
and a call to Lauren Beshore, vice president
in power, energy and renewables investment banking at
Guggenheim in New York, who is said to be running the deal, was
not returned by press time.
Another merchant gas-fired project in Ector County changed
hands last summer, when Vistra Energy acquired
the Odessa combined-cycle project from a subsidiary of
Vistra paid $350 million for the 1,054 MW facility, little
more than half what Koch Ag & Energy
Solution had paid for it in 2013 (