Narrative
Full Description
Project narrative
On June 29, 2018, financial close was reached on a deal in which a syndicate of seven banks — including China Merchants Bank Co., Ltd. — entered into a $325.00 million USD syndicated loan agreement with Stonepeak Kestrel Holdings LLC — a Delaware-incorporated wholly-owned subsidiary of Stonepeak Infrastructure Partners, a Delaware-incorporated American independent infrastructure investment manager headquartered in New Yok City, New York — for the acquisition of the 1,112 MW Units 1 and 2 of the Canal Generating Plant. This loan was divided into two tranches: a $280.00 million USD term loan tranche with a maturity period of seven years, a final maturity date of June 28, 2025, and an interest rate of LIBOR plus a margin of 300-325 basis points (bps); and a $45.00 million USD revolver tranche with a maturity period of seven years and a final maturity date of June 29, 2025. China Merchants Bank contributed $40.00 million USD to the $280 million USD term loan tranche. In addition to China Merchants Bank, the following lenders contributed the respective amounts to the tranche: Associated Bank ($33.25 million USD), CoBank ($33.25 million USD), Crédit Agricole Group ($33.25 million USD), East West Bank ($33.25 million USD), Investec Bank ($50.80 million USD), and MUFG Bank ($56.20 million USD). The $45 million USD revolver tranche was provided by Investec ($14.20 million USD) and MUFG ($15.80 million USD). The proceeds were to be used by the borrower for the acquisition of Units 1 and 2 of the Canal Generating Plant, two units of the three-unit Canal Generating Plant, located in Sandwich, Massachusetts on the Cape Cod, which have a combined summer capacity rating of about 1,112 MW. The plant is located at a 52-acre campus on Freezer Road. The two units were commissioned in 1968 and were dual-fuel peaking units. A third unit, a 330 MW natural gas turbine, was under construction at the Canal Generating Plant, and sold separately to Stonepeak. On March 22, 2018, Stonepeak Kestrel Holdings LLC entered into a Purchase and Sale Agreement to purchase all of the right, title, and interest in Unit 1 and 2 from subsidiaries of GenOn Energy, Inc., itself a wholly-owned subsidiary of NRG Energy, Inc. for $390.3 million USD, with a purchase price of $320 million USD, an estimated working capital (including target fuel inventory) of $32.5 million USD, an anticipated refund of $13.5 million USD from NRG in respect of the Canal Unit 3 option, and an estimated $24.3 million USD of post-closing excess fuel inventory payments, subject to some adjustment. The acquisition was expected to close early in the third quarter of 2018. The acquisition was completed on June 29, 2018. Ironclad Energy Partners, a joint investment vehicle of Stonepeak, took control of the units.
Staff comments
1. A 6-month LIBOR was assumed. The average 6-month LIBOR for June 2018 was 2.49590%. Therefore, the interest rate has been coded as 2.49590% + 3.00% = 5.4959%. 2. It is plausible, if not likely, that the specific borrowing institution was a special purpose vehicle subsidiary of Stonepeak Kestrel Holdings LLC was the borrower. For the time being, as Stonepeak Kestrel Holdings LLC signed the purchase agreement, AidData has assumed it was the borrower. This issue merits further investigation.