NextEra Energy has signed a deal to acquire the Trans Bay Cable underwater transmission system in California from SteelRiver Infrastructure Fund North America and its partners.
Through its NextEra Energy Transmission subsidiary, the buyer is paying $1 billion, including the assumption of project debt, for the asset.
SteelRiver reached primary financial close on the asset in 2007, when the fund manager still went by the Babcock & Brown name, with a roughly $555 million financing package from BayernLB (PFR, 1/11/08).
The project began operating in 2010, at which point the sponsors completed a seven-year bond refinancing led by Barclays Capital (PFR, 12/17/10).
There was some $411 million outstanding under the bond as of December 2015, according to a report issued by Moody's Investors Service as it upgraded the debt from Baa2 to Baa1.
"The rating upgrade acknowledges that nearly $372 million of outstanding Notes will require refinancing in 2017," wrote the rating agency's analysts at the time. Moody's withdrew its rating when the debt was repaid on maturity in June of last year.
MUFG and RBC Capital Markets were bookrunners on a 30-year private placement refinancing to replace the debt that was repaid, according to Euromoney Institutional Investor data.The package comprised $186 million of term notes and a $60 million five-year revolving and letter of credit facility.
Trans Bay Cable is a high-voltage direct current underwater transmission link, which runs for 53 miles between Pittsburg and San Francisco. It provides roughly 40% of the electricity used in San Francisco and the surrounding areas on a daily basis.
The U.S. Federal Energy Regulatory Commission sets the asset’s utility rates and the California Independent System Operator sets its revenues. Both bodies must approve the transaction, which is expected to close next year.
RBC Capital Markets advised SteelRiver on the sale of the asset, with Winston & Strawn acting as legal adviser.
Wells Fargo and Pillsbury Winthrop advised NextEra, with Ellison Schneider Harris & Donlan as regulatory counsel.