Client Spotlight: sPower Project Financing Named North American Renewables Deal of the Year

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Stoel Rives congratulates its client sPower on receiving the honor of North American Renewables Deal of the Year for its pricing of the first-ever broadly distributed back-leverage private placement financing on nine unique tax equity partnerships.

Thomson Reuters Project Finance International, which granted the award, noted the following about the financing:

“The financing backs a portfolio of 41 utility-scale solar and wind projects with a capacity of 565MW. Proceeds were used to refinance existing loans, leverage unencumbered assets, pay swap breakage, and make a one-time distribution to the sponsor. The US$421.4m bond financing followed the equity sale of sPower to AES and Canada’s investment fund manager Alberta Investment Management Corp for US$853m in cash. Citi acted as joint M&A adviser.

“The deal refinanced sPower’s US$300m medium-tenor bank loans with private placement notes on 50% of its operating portfolio. The back-leverage notes take cashflows through the maturity of all power purchase agreements (PPAs) with no tail, a balloon sized to contracted cashflows beyond year 19.1, some solar renewable energy credit (SREC) and merchant revenue, and production uplift from the ‘portfolio effect’ for both solar and wind projects.

“The portfolio also allowed the company to fully leverage 140MW of wind assets through to 20 years, which is commensurate with PPA maturities, despite target internal rate of return (IRR)-driven step-ups in cash sweeps and cashflow blackouts in downside scenarios.”

A full description of the deal may be viewed here.

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