The first financing to close in 2019 for a new gas-fired project in PJM Interconnection was not the standard fare. The transaction financed the 485 MW Long Ridge Energy Generation project – also known as Hannibal Port Power – as well as an interest in a gas production field under development in Ohio.

Because of this and the project’s unusual commodity hedge structure, developer Fortress Transportation and Infrastructure had to put together a unique non-bank debt deal.

The project has two fixed price power agreements with different tenors and collectively covering 94% of its capacity. Powder Day Capital, an advisory firm based in Bridewater, New Jersey, advised Fortress on the hedges with counterparties including Morgan Stanley CommoditiesEDF Trading and Axpo U.S.

The gas-fired generation project was the brainchild of former JP Morgan analyst Ryan Stewart, who was a managing director at Fortress in New York at the time the deal closed. He left Fortress shortly after shepherding the financing across the finish line to take up a position as a managing director at Ridgewood Infrastructure.

The deal illustrates an alternative route to financing hedged gas-fired projects in PJM, largely without the involvement of commercial or investment banks, though ING did provide a letter of credit and investment banks were involved in the subsequent monetization of a 50% stake in the project.

“That’s a good trade,” said an investment banker that was not involved. “It’s an aggressive play, but brilliant from a gas standpoint. I think it’s a brilliant project.”

Sponsors: Fortress Transportation and Infrastructure, GCM Grosvenor

Total debt: $742 million

Closing date: February 15, 2019

First lien loan: $445 million

Second lien loan: $143 million

Letter of credit: $154 million

Lead arranger: AMP Capital

Co-arrangers: ING Capital, Mirae Asset Daewoo, Elsdon Investment

LC issuer: ING Capital

Borrower’s counsel: Cravath, Swaine & Moore

Arranger’s counsel: Latham & Watkins

Project counsel: Morgan Lewis

Local counsel: Porter Wright Morris & Arthur

Commodity hedge adviser: Powder Day Capital

Independent engineer: Black & Veatch

Insurance consultant: Aon Risk Services

Admin agent: Cortland Capital Market Services

EPC: Kiewit

Sell-side financial adviser: Citi

Buy-side financial adviser: TD Securities

GCM Grosvenor’s counsel: Baker Botts

See all of the 2019/2020 awards

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