Short list: Transmission Deal of the Year 2020
Power Finance & Risk is pleased to announce the short list for the following award: Transmission Deal of 2020.
Transmission projects are among the most difficult to develop. We have selected three deals from 2020 in this category. Please let us know if your firm is missing from the credits.
Axium Infrastructure and Nuveen arranged a complex financing package to support their acquisition of Wind Energy Transmission Texas, an electric transmission provider in West Texas, from Canada’s PSP Investments and Brookfield Infrastructure Partners. In a process codenamed Project Hotspur, the buyers secured a $75 million holdco facility from MUFG and Zions Bancorp and about $272 million of senior secured notes due in 2030, issued by WETT Holdings, in a private placement. The company owns and operates 375 miles of 345 kV transmission lines and six substations.
The deal closed on July 27, 2020. Coverage here.
Buyers: Axium Infrastructure and Nuveen, which is the investment manager of TIAA
Sellers: PSP Investments and Brookfield Infrastructure Partners
Deal value: $1.35 billion
Holdco facility: $75 million
Lenders: MUFG and Zions Bancorp
Private placement: $272 million
Buyers’ financial adviser: Barclays
Sellers’ financial adviser: BMO Capital Markets
Buyers’ counsel: Winston & Strawn
Sellers’ counsel: King & Spalding
Counsel to TIAA: Morgan Lewis
Lenders’ counsel: Shearman & Sterling
LS Power Grid
The more than $700 million debt financing and corporate restructuring that LS Power undertook to create its LS Grid transmission platform is impressive not only because of its significant scale, but also due to the complexity of reaching financial close for multiple, discrete transactions simultaneously. This included construction financing, refinancings for operating assets, opco and holdco debt, private placements and commercial bank debt, all executed in tandem with an internal corporate restructuring in an effort to create a platform for LS power to hold existing transmission assets and develop additional assets in the future.
The deal closed in December 2020.
Sponsor: LS Power
Deal value: $700 million
Sponsor’s counsel: Milbank
Pattern Energy Group’s over $1.7 billion financing of its Western Spirit transmission line and wind project portfolio in central New Mexico was one of the largest renewable project financings in the US in 2020 and supported the construction of the largest single-phase renewables project in the country. The 150-mile, 345 kv AC transmission line has a capacity of 800 MW and will carry the output of the four adjacent wind farms in the portfolio, which total 1,050 MW, across New Mexico and Arizona to deliver it to California. The debt package was split between a construction loan, which will partly bridge to a tax equity investment underwritten by GE Energy Financial Services, as well as a letter of credit and back-leverage term loan.
Sponsor: Pattern Energy Group
Deal size: $1.76 billion
Tax equity commitments: $900 million
Coordinating lead arranger: HSBC
Lead arrangers and joint bookrunners: CoBank (sole term loan bookrunner), Société Générale (letter of credit provider), Banco Santander, MUFG and CIBC
Sponsor’s counsel: Milbank and Skadden Arps
Lenders’ counsel: Winston & Strawn
Independent engineer and wind consultant: DNV GL
Transmission consultant: Navigant
Insurance consultant: Moore McNeil