Bank of China contributes $55.2 million AUD to the $230 million USD credit facility tranche of a $241 million AUD syndicated loan for the 255 MW Sunraysia Solar Farm Project

Project narrative

On October 5, 2018, financial close was reached on a deal in which a syndicate of five banks — including the Bank of China (BOC) — provided a $241.00 million AUD ($170.34 million USD) syndicated loan to Sunraysia Solar Fin Pty Ltd — a special purpose vehicle (SPV) jointly owned by the UK's John Laing Group (90.1% equity stake) and Australia-based renewable energy developer Maoneng Australia Pty Ltd (Maoneng Group) (9.9% equity stake) — for the 255 MW Sunraysia Solar Farm Project. This $241 million AUD syndicated loan was divided into two tranches: a $230.00 million AUD ($162.57 million USD) credit facility tranche with a maturity period of five years and a final maturity date of October 5, 2023 and a $11.00 million AUD ($7.77 million USD) revolver tranche with a maturity period of five years and a final maturity date of October 5, 2023. In addition to BOC, the following banks contributed to this syndicated facility: Norddeutsche Landesbank Girozentrale (Nord L/B), ING Group N.V., Mizuho Financial Group (MHFG), and National Australia Bank Limited (NAB). All lenders served as mandated lead arrangers. BOC contributed $55.20 million AUD ($39.02 million USD) to the $230 million AUD credit facility tranche; NAB and ING each contributed $34.50 million AUD ($24.38 million USD), Nord L/B contributed $50.60 million AUD ($35.76 million USD), and MHFG contributed $55.20 million USD to it. BOC contributed $2.64 million AUD ($1.87 million USD) to the $11 million AUD revolver tranche, NAB and ING each contributed $1.65 million AUD ($1.17 million USD), Nord L/B contributed $2.42 million AUD ($1.71 million USD), and MHFG contributed $2.64 million AUD. In addition to the debt, Maoneng Group contributed $11.93 million AUD ($8.43 million USD) and John Laing contributed $108.60 million AUD ($76.76 million USD) in equity for $120.53 million AUD ($85.19 million USD) in total for the $361.53 million AUD ($255.53 million USD) for the Sunraysia Solar Farm. Record ID#93879 captures BOC's $55.20 million AUD contribution to the $230 million AUD credit facility tranche. Record ID#93880 captures BOC's $2.64 million AUD contribution to the $11 million AUD revolver tranche. In 2021, the syndicated entered into an amendment agreement with Sunraysia Solar Fin Pty Ltd concerning $223 million AUD of debt amidst delays in the project. As a result, the maturity period of the syndicated facility was extended by two years with amortization and covenant waivers and the addition of another contingent funding instrument. Record ID#93883 captures this extension. The proceeds of this loan were to be used by the borrower to construct the Sunraysia Solar Farm, a 255 MW photovoltaic (PV) solar farm on 1,000 hectares of cleared agricultural land in the Balranald Shire Council Local Government Area, 17 kilometers south of the center of the town of Balranald in southern New South Wales. The solar farm was outfitted with JinkoSolar's HC Cheetah series solar modules mounted on horizontal single-axis trackers. The project also included the construction of perimeter security fencing, an energy storage unit, and a maintenance and office building, as well as a 220 kV overhead transmission line to connect the solar farm's onsite substation to TransGrid's Balranald substation 2 kilometers north of the project site. The solar farm was designed to generate about 529 GWh of energy per annum, equivalent to powering 50,000 homes and offsetting carbon emissions of about 430,000 tons. It consisted of over 755,000 PV modules (solar panels) mounted on 8,737 NexTracker single-axis trackers. The project had an expected operational life of 30 years and would help the State of New South Wales meet its renewable energy goal of 40% by 2025, as well create 100 direct jobs. The project was first proposed in June 2016, with an environmental impact statement (EIS) submitted in February 2017 and construction approval granted in July 2017. In December 2017, Maoneng entered into two power purchase agreements (PPA) with University of New South Wales (UNSW) and AGL Energy; UNSW agreed to purchase 124,000 MWh of the farm's energy annually for a 15-year period and AGL committed to off-taking up to 800,000 MWh of energy annually for a 15-year period, allowing AGL to replace its old Liddell coal-fired power station. Maoneng served as the construction manager during construction and then asset manager during its operations. In October 2018, Maoneng signed a long-term equity partnership with John Laing Group, which committed to investing $108.6 million AUD for a 90.1% equity stake in the farm. In October 2018, Decmil Group Limited (DGL) won the $277 million AUD engineering, procurement, and construction (EPC) contract for implementation. In October 2018, JinkoSolar won the contract for the supply of the solar farm's PV modules. In November 2018, Decmil awarded a subcontract to NEXTracker for the provision of its smart solar tracker NX Horizon for the farm. Decmil also awarded a subcontract for implementation to Tranex Solar Pty Ltd. Schneider Electric provided the inverters for the solar plant. The solar plant was expected begin operations by the end of 2019. The groundbreaking ceremony was held on February 26, 2019. In August 2019, UNSW announced that the near completion of the project. As of August 13, 2019, all solar panels had been installed and 95% of the electrical installation had been completed too. However, the project was repeatedly delayed by technical and transmission issues. In November 2020, the Australian Energy Market Operator (AEMO) approved the solar plant's registration, but formal commissioning was delayed. The sponsors and Decmil entered into a legal dispute over a dispute about the contracted date for substantial completion. The dispute was specifically over claims for time extensions, variations, payment of liquidated damages, return and reinstatement of security, and claims concerning alleged defects in the farm. John Laing and Maoneng sought up to $28.7 million AUD for the failure of the solar farm to obtain the registration certificate on time; while Decmil argued it was the failure of the owners to do so, since construction was completed on time. Such claims are relatively common in the solar industry due to issues with grid congestion and new regulations for grid connections. Additionally, Decmil entered into a legal dispute with the inverter supplier Schneider related to the commissioning dispute. Maoneng and John Laing alleged that the inverters were “not contractually compliant”, but Decmil argued that they had no role in the delay. Even so, Decmil made a $28 million AUD claim against Schneider due to the alleged issues with the inverters. Sponsor John Laing took a £10 million GBP ($17.9 million AUD) loss because of transmission issues related to the Sunraysia Solar Farm, specifically a constraint placed by AEMO on the instability of New South Wales' southwestern power system, limiting the flow of energy from Sunraysia. Decmil took a $10 million AUD write down from the project. Despite the November 2020 commissioning, the issuing of Substantial Completion Certificate was only announced February 4, 2022.