ICBC reschedules its $170.83 million USD contribution — via a two-and-a-half-month maturity extension — to the $1.025 billion USD Term B loan tranche of a $1.202 billion USD syndicated loan for the 945 MW Sandy Creek Energy Station (SCES) 2013 Refinancing Project (Linked to Record ID#105155, #105156, and #105454)

Project narrative

On November 8, 2013, financial close was reached on a deal in which a syndicate of six banks — including the Industrial and Commercial Bank of China (ICBC) — entered into a $1.202 billion USD syndicated loan agreement with Sandy Creek Energy Associates, L.P. (SCEA) — a Delaware-incorporated special purpose vehicle (SPV) and wholly-owned subsidiary of LS Power Development, LLC, a Delaware-incorporated American power and energy infrastructure development, investment, and operation company — for the 945 MW Sandy Creek Energy Station (SCES) 2013 Refinancing Project. This loan carried a maturity period of seven years, a final maturity date of November 26, 2020, and an interest rate of LIBOR plus a margin of 400 basis points (bps). This loan was divided into three tranches: a $1.025 billion USD Term B loan tranche; a $75.00 million USD debt service reserve and working capital tranche; and a $102.00 million USD senior-secured tax-exempt letter of credit tranche. In addition to ICBC, the following lenders contributed to the loan syndicate: BNP Paribas S.A., Crédit Agricole Group, Goldman Sachs Group, Inc., ING Group N.V., and Investec Bank. The loan was launched at $900 million USD but increased during syndication. All six lenders, including ICBC, contributed $170.83 million USD to the $1.025 billion USD Term B loan tranche. Record ID#105155 captures ICBC's contribution. All six lenders, including ICBC, contributed $12.50 million USD to the $75 million USD working capital tranche. Record ID#105156 captures ICBC's contribution. All six lenders, including ICBC, contributed $17.50 million USD to the $102 million USD letter of credit tranche; AidData does not consider letters of credits to be flows. The proceeds of the term B loan tranche were to be used by the borrower to refinance existing debt accrued to fund the construction of the Sandy Creek Energy Station, a coal-fired power generation facility in Riesel, McLennan County, Texas with advanced emission controls that sells base load power to the Electric Reliability Council of Texas, Inc. (ERCOT). The proceeds of the working capital tranche were for working capital purposes. Sandy Creek had been commissioned in May 2013. The ownership of the Sandy Creek Energy Station was undivided, with shareholders of Sandy Creek Energy Associates, L.P. (63.87% stake), Brazos Electric Cooperative (25% stake), and Lower Colorado River Authority (LCRA) (11.13% stake). Brazos and LCRA each entered into 30-year Power Purchase Agreements (PPAs) for the energy generated by the plant. Sandy Creek was the last coal-fired power plant built in the United States with a capacity over 100 MW. Despite the presidency of Donald Trump leading to lifting of regulations on coal-fired plants, Sandy Creek began to suffer due to competition from cheaper natural gas and solar and wind power. Furthermore, the outbreak of the COVID-19 pandemic led to a shrink in energy demand and a glut of natural gas, making coal-powered plants uneconomical. In July 2020, due to the lost of a major customer, it began apparent that SCEA would be unable to repay the loan at its maturity in November 2020. SCEA requested an extension of the maturity, but the lenders refused; SCEA warned that it would have to file the plant into bankruptcy as a request, and it and the lenders engaged about a possible debt restructuring. The lenders eventually entered into a forbearance agreement with SCEA, extending the maturity of the $1.025 billion USD term loan B tranche by roughly two-and-a-half months — for a new maturity period of approximately 7.203 years — to February 8, 2021. Record ID#105453 captures this rescheduling. Then, in early February 2021, the lenders entered into another forbearance agreement with SCEA to further extend the maturity by two months — for a new maturity period of approximately 7.37 years — to April 9, 2021. Record ID#105454 captures this rescheduling. In late February 2021, a major winter storm caused widespread power failures in Texas, further harming the Texas energy market and sending Sandy Creek specifically offline. In March 2021, Brazos Electric Power Cooperative, partial owner and major customer, filed for bankruptcy. As of late March 2021, SCEA was in advanced talks to hand over control of its controlling stake in the Sandy Creek Energy Station in Texas to the lenders.