OPG arranges project financing for Lower Mattagami River project

Ontario Power Generation Inc. reached financial close of a $225 million private placement bond offering to fund the re-development and expansion of four hydroelectric generating stations on the lower part of the Mattagami River in northeastern Ontario, on April 23, 2012.

The bonds were issued by Lower Mattagami Energy Limited Partnership, a limited partnership between OPG, as the sole general partner, and LM Energy Inc., a subsidiary of OPG.

LMELP reached financial close of the $225 million private placement issue of senior secured bonds at a fixed 4.175% annual interest rate, due April 23, 2052.

This is the second of several private placement issues of senior secured bonds that are planned to be used to refinance commercial paper or other indebtedness, which collectively will complete the forecast $1.9 billion debt financing required for the project.

The re-development and expansion of four hydroelectric generating stations will utilize available water more efficiently, and increase production of clean and renewable electricity. One additional generating unit will be added to each of three existing stations – Little Long, Harmon and Kipling.

The fourth station – Smoky Falls, will be decommissioned and replaced by a new, three-unit, 267 megawatt generating station. The expanded Lower Mattagami River Complex will have a total generating capacity of 924 MW, an increase of 438 MW.

Construction began in June 2010, and continues to progress well towards completion in 2015. Approximately 900 workers are currently employed by the project.

The bonds received a long-term credit rating of ‘A (high)’ by Dominion Bond Rating Service, and ‘A2’ by Moody’s. The re-development and expansion is supported by a long-term Hydroelectric Energy Supply Agreement with the Ontario Power Authority.

The entities that form the Lower Mattagami River Complex are currently wholly owned (directly or indirectly) by OPG. The Moose Cree First Nation has an option to acquire up to 25% of the entity that will own the expansion assets – the additional units at each of the three existing stations and the new Smoky Falls station.