News & Analysis

ArcLight, GIP wind affiliate closes $650m financing

Terra-Gen Power, an affiliate of US fund managers ArcLight and GIP, has closed a $650m construction financing for two US wind projects representing a combined 300 megawatts.

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Terra-Gen Power, which is affiliated to US fund managers ArcLight Capital Partners (ArcLight) and Global Infrastructure Partners (GIP), has closed a $650 million financing for the 168-megawatt (MW) Alta Wind VII project and the 132MW Alta Wind IX project.

The two projects are part of the Alta Wind Energy Center (AWEC) in Tehachapi, California, which now boasts 1,320MW in total capacity, of which 1,020MW is operational, and is the largest wind farm in the US.

Both the Alta Wind VII and Alta Wind IX financings include construction and seven-year term loans, bridge loans to Investment Tax Credit (ITC) grants from the US Department of Treasury, and ancillary credit facilities. Proceeds of the financing will be used to reimburse funds previously committed by ArcLight and GIP for development of the projects and to fund the balance of the projects’ construction costs.

Mitsubishi-UFJ Financial Group affiliate Union Bank and RBS Securities acted as co-bookrunners for the financing, while Bank of Montreal, Canadian Imperial Bank of Commerce, Key Bank, IPEX Bank and Santander acted as joint lead arrangers. The lender group also included Sumitomo, BayernLB, DZ Bank and Associated Bank. The syndication of the facilities was oversubscribed, according to a statement from ArcLight.

“We are excited to continue to build upon important existing lender relationships while at the same time broadening Terra-Gen’s bank group with this financing,”  said Jim Pagano, chief executive of Terra-Gen in the statement.

The two projects, as with the AWEC project generally, will sell their renewable energy to Southern California Edison (SCE) under power purchase agreements managed, operated and controlled by Terra-Gen. Construction of the projects is expected to complete in the fourth quarter of 2012.

Earlier this month, Terra-Gen agreed to sell the 150MW Alta VI project to EverPower Wind for an undisclosed sum. Towards the end of last year, it sold the Alta Wind VIII project – also 150MW – to fund manager Brookfield.