PFR's Deal of the Year Awards are back, recognizing excellence in power project finance and M&A. Check out the shortlisted deals in the North America Renewable Energy Project Finance category.

Congratulations to everyone who worked on the shortlisted deals:

  • Cordelio Power’s Project Clover acquisition financing
  • Longroad Energy’s Phoebe Solar primary financing
  • Macquarie Capital’s Electrodes expansion financing
  • Capital Dynamics’ acquisition financing for its take-private of 8point3 Energy Partners

Deal profiles:

Project Clover

Sponsor(s)

Cordelio Power (Canadian Pension Plan Investment Board)

Assets

A net 656 MW interest (49%) in a 1.7 GW portfolio of contracted or hedged wind and solar projects in four Canadian provinces (Alberta, Saskatchewan, Ontario and Quebec) and two U.S. states (Nevada and Colorado), acquired from Enbridge.

Deal Type

Senior secured private placement bonds

Deal Value

$669 million equivalent (split between a C$677.5 million tranche and a $148.6 million tranche.

Closing Date

Oct. 24

Bookrunners

Citi, RBC Capital Markets

Legal Advisers

Torys (issuer)
Stikeman Elliott (lenders Canada)
Holland & Hart (lenders U.S.)

Other Involved Parties

Agentis Capital (sponsor’s financial adviser)
K2 Management (independent engineer)
Aon Reed Stenhouse (independent insurance consultant)
Operis Business Engineering (model auditor)

Notes:

The dual-currency deal was marketed simultaneously to Canadian and U.S. investors and both tranches were more than three-times oversubscribed. Investor-swapped notes were offered in both transactions at no concession to the issuer. The debt was sized to include production uplift from “portfolio effect” due to geographical and technological diversity.

Phoebe Solar

Sponsor(s)

Longroad Energy (developer), Innergex Renewable Energy (equity investor)

Assets

Phoebe Solar, a 250 MW solar project in Winkler County, Texas, contracted under a 12-year power purchase agreement with Shell Energy North America.

Deal Type

Bank market term loan A

Deal Value

$366 million, split between a $176 million 15-month tax equity bridge loan, a $116 million construction-plus-seven-year back leverage term loan, a $60 million energy hedge letter of credit, an $8 million interconnection letter of credit and a $6 million debt service reserve letter of credit.

Closing Date

July 2

Bookrunners/Lenders

CIT Bank (coordinating lead arranger)
Rabobank (joint lead arranger, letter of credit issuer)
Fifth Third Bank, National Australia Bank (construction lenders)
Huntington National Bank, SabadellSilicon Valley Bank, Zions Bank (back leverage lenders)

Legal Advisers

Norton Rose Fulbright (Longroad)
Winston & Strawn (lenders)
Latham & Watkins (Innergex)
Wilson Sonsini (tax equity investor)

Other Involved Parties

CCA Group (financial adviser)
Wells Fargo (tax equity investor)
ICF Resources (independent engineer, market consultant)

Notes:

The deal is said to be the first ever back leverage financing of a solar project with an energy hedge that also gave credit to post-contract merchant revenues. The debt was syndicated within about three months of financial close.

Extensive scenario testing and conservative merchant pricing assumptions were used to arrive at a debt sizing that was acceptable to the lenders. The project is subject to substantial basis risk, since, while it is located in the northwest of Texas, its energy hedge settles at ERCOT’s southern hub. The transaction features a tracking account provided by Shell Energy North America to ensure short-term adverse basis differential movements do not disrupt project revenues. Grid load studies, future transmission and solar capacity additions and basis differential downside variations were reviewed to demonstrate that the project was well-protected against basis risk.


Electrodes Expansion (Sparks)

Sponsor(s)

Macquarie Capital

Assets

Portfolio of behind-the-meter battery storage systems totaling 315 MWh of storage and 52.5 MW of capacity in Southern California Edison’s West Los Angeles Basin service territory in California.

Deal Type

Bank market term loan A

Deal Value

$100 million

Closing Date

Dec. 20

Bookrunners

CIT Bank, Rabobank, Sumitomo Mitsui Banking Corp.

Legal Advisers

Orrick (borrower)
DLA Piper (lenders)

Other Involved Parties

Advanced Microgrid Solutions (developer)

Notes:

The portfolio replaces and expands a debt financing provided by CIT for the first 10 MW/66 MWh tranche of the portfolio the previous year. The fleet comprises installations ranging from 250 kW to 2.5 MW located at large-load commercial, industrial and government host sites in Los Angeles and Orange counties, Calif. Revenues come from 10-year availability contracts with Southern California Edison under which the utility can call upon the assets a fixed number of times each year. In addition, the facilities provide services such as demand management, back-up power and enhanced power quality to their hosts. “It was important to bring new banks into the asset class and to create a club of lenders, which gives us a sustainable source of funding as we develop more battery opportunities,” said Chris Archer, head of green energy Americas at Macquarie Capital (PFR, 12/21/18).


8point3 Energy Partners Acquisition Financing

Sponsor(s)

Capital Dynamics

Assets

A 945 MW portfolio of utility, commercial, industrial and residential solar projects in the U.S.

Deal Type

Bridge loan, senior secured term loan, private placements

Deal Value

$1.1 billion

Closing Date

June 21-22

Bookrunners

MUFG (bridge loan, private placement)
Allianz Global Investors (private placement)
KeyBank, ING Capital (term loan provider)
Commonwealth Bank of Australia, KeyBank, Natixis, Sabadell, Santander, Rabobank, Nomura, Barings (senior secured term loans)

Legal Advisers

Amis Patel & Brewer (Capital Dynamics)
Milbank (MUFG)
Mayer Brown (AllianzGI)

Other Involved Parties

Commonwealth Bank of Australia, KeyBank, Natixis, Sabadell, Santander, Rabobank, Nomura, Barings (provided commitments)
Bank of America Merrill Lynch, Goldman Sachs (sell-side advisers)
Skadden (advised First Solar on sale of yieldco)
Baker Botts (advised SunPower on sale of yieldco)
Richard Layton & Finger (advised conflicts committee of board of directors on sale of yieldco)

Notes:

Joint-sponsored by developers First Solar and SunPower, 8point3 Energy Partners burst onto the scene in mid-2015, at the peak of the yield company craze, with Goldman Sachs and Citi guiding its $420 million initial public offering to market at the high end of the guidance price range. The exuberance did not last long, however, as investors soured on the renewable energy roll-up business plan of voracious growth amid the spectacular collapse of SunEdison. Despite the slump in yieldco stocks, First Solar and SunPower managed to complete several drop-downs before first one sponsor, then the other, decided it was time to get out. The transaction that emerged differed from other yieldco transfers that have taken place (the two TerraForm companies and the yieldcos formerly known as Abengoa Yield and NRG Yield) in that it was a full take-private and delisting. The buyer, Capital Dynamics, teamed up with project finance behemoth MUFG, dependable private placement provider Allianz Global Investors and residential solar finance front-runners KeyBank and ING Capital to finance the huge and very public deal with three separate tranches of debt secured on distinct portfolios of assets, apparently without missing a beat.

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