LS Power has hired a pair of bulge-bracket investment banks to auction off a operational portfolio of contracted gas-fired combined-cycle plants.
The approximately 1.6 GW portfolio comprises the 516 MW Carville Energy Center near Baton Rouge, La., and the 1,127 MW Oneta Energy Center near Tulsa, Okla.
Barclays Capital and Goldman Sachs are preparing to run a traditional two-stage sale process as LS Power's financial advisers, according to a teaser seen by PFR.
Spokespeople for LS Power and the banks did not respond to requests for comment by press time.
The seller is understood to be willing to split the assets up, says a project finance banker away from the deal. Another banker agreed that such a plan is feasible “if there is no debt over the assets together."
The plants were individually project financed with “low-cost, efficient debt” that can remain in place as part of the sale, according to the marketing materials circulated by the investment banks.
“The Projects are highly financeable as a portfolio or on an individual basis," reads the teaser. "[E]xisting financings provide flexibility for Buyer to further optimize leverage while realizing a steady long-term cash yield to equity.”
The $365 million bank market refinancing of the Carville facility last April was one of several refinancings of gas-fired projects last year.
ING Capital, CoBank and MUFG were the bookrunners on the deal, which comprised a $265 million 10-year term loan, $75 million seven-year letter credit and $25 million seven-year revolver, all priced at 175 basis points over Libor (PFR, 4/26).
LS Power has owned the project since 2014, when it bought it from Calpine Corp. along with five other gas-fired assets, including Oneta, in a $1.57 billion deal (PFR, 4/21/14).
At the time of the acquisition, LS Power refinanced Oneta with a $737 million deal arranged by BNP Paribas and priced at 250 bp over Libor (PFR, 7/15/14).
The Carville and Oneta plants have power purchase agreements expiring in 2032 and 2042 respectively. Carville has multiple offtakers, including a regulated utility and a steam customer, as does Oneta, with a regulated utility, a municipality and two electric cooperatives buying its output.
Most of Carville’s output is contracted with Entergy through June 2032 under a 485 MW agreement signed in May 2011. Entergy sells half of its contracted capacity on to Entergy Louisiana.
Once that agreement expires, another 10-year agreement for the same amount of capacity kicks in with Entergy Louisiana, beginning in June 2022.
Carville and Oneta both came online in 2003 and are fitted with General Electric 7FA turbines.