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 notes.

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, respectively.


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 Ratings.

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 ( PFR, 10/21/15).

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 Koch Industries.

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 ( PFR, 7/11).

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