Narrative
Full Description
Project narrative
On June 29, 2018, financial close was reached on a deal in which a syndicate of 14 banks — including China Merchants Bank Co., Ltd. and the Industrial and Commercial Bank of China (ICBC) — entered into a $555.00 million USD syndicated loan agreement with New Covert Generating Company, LLC — a Delaware-incorporated special purpose vehicle (SPV) wholly-owned by Segreto Covert, LLC, a SPV and wholly-owned direct subsidiary of Segreto Power LLC, a wholly owned direct subsidiary of Segreto Holdings, LLC, which is a wholly-owned subsidiary of Eastern Generation Holdings, LLC (EGH), which is owned by Eastern Generation Fund VI Holdings, LLC, a wholly-owned subsidiary of ArcLight Energy Partners Fund VI, L.P. (50.4% stake) and by passive investors holding only limited consent or veto rights (49.6% stake) — for the 1,176 MW New Covert Generating Facility 2018 Refinancing Project. This loan was divided into four tranches: a $483.65 million USD Term Loan A tranche with a maturity period of seven years, a final maturity date of June 29, 2025, and an interest rate of LIBOR plus a margin of 300 basis points (bps); a $16.35 million USD term loan tranche with a maturity period of seven years and a final maturity date of June 29, 2025; a $41.78 million USD letter of credit tranche with a maturity period of seven years and a final maturity date of June 29, 2025; and a $13.22 million USD letter of credit tranche with a maturity period of seven years and a final maturity date of June 29, 2025. China Merchants Bank contributed $22.75 million USD and ICBC contributed $45.28 million USD to the $483.65 million USD Term Loan A tranche. Record ID#105397 captures China Merchants Bank's contribution. Record ID#105398 captures ICBC's contribution. In addition to China Merchants Bank and ICBC, the following lenders contributed the respective amounts to the tranche: ABN AMRO Bank N.V. ($26.28 million USD), Associated Banc-Corp ($15.00 million USD), BNP Paribas S.A. ($110.43 million USD), Commonwealth Bank of Australia (CBA) ($22.75 million USD), Crédit Agricole Group ($26.78 million USD), E.Sun Financial Holdings ($25.00 million USD), FirstBank Puerto Rico ($15.00 million USD), Investec Bank ($26.78 million USD), MUFG Bank, Ltd. ($9.53 million USD), Société Générale S.A. (SocGen) ($31.00 million USD), Sumitomo Mitsui Banking Corporation (SMBC) ($45.28 million USD), and SunTrust Robinson Humphrey Inc. (STRH) ($49.28 million USD). BNP Paribas was the sole provider of the $16.35 million USD term loan tranche. Eight lenders, including ICBC, each contributed $5.22 million USD to the $41.78 million USD letter of credit tranche; AidData does not consider letter of credits to be flows. ABN AMRO, BNP Paribas, CBA, Crédit Agricole, Investec, SMBC, and STRH also contributed to the tranche. MUFG Bank was the sole provider of the $13.22 million USD letter of credit tranche. BNP Paribas served as underwriter. ICBC, ABN AMRO, CBA, Crédit Agricole, Investec, SMBC, and STRH served as coordinating lead arrangers. The loan was oversubscribed in syndication and increased from the initial $477.5 million USD target. The proceeds were to be used by the borrower to refinance the 1,176 MW New Covert Generation Facility, a natural gas-fired combined-cycle gas turbine (CCGT) power plant located in Covert, Van Buren County, Michigan; specifically, it allowed ArcLight to transfer the asset from Eastern Covert Midco, LLC, its financing SPV, and bring to Segreto Power Holdings, LLC, both subsidiary of Eastern Generation Holdings, LLC. Concurrent with the refinancing, EIG Global Energy Partners and Northwestern Mutual Life Insurance purchased an 80% preferred equity stake in the project. The deal was completed on August 23, 2018. New Covert is a wholesale generator interconnected to the transmission system operated by PJM Interconnection, selling its energy, capacity, and ancillary at market-based rates on a merchant basis. It also provides electricity to the Midwest Independent Transmission System Operator (MISO) power grid. The plant was commissioned in March 2004.