OMAHA, Neb. – Tenaska Capital Management, LLC (TCM) today announced the closing of an approximately $370 million secured credit facility for three PJM natural gas-fueled peaking electric generating plants managed by TCM.
The transaction, comprised of a $350 million six-year term loan B and a $20 million five-year working capital revolver, will refinance an existing debt facility, fund reserves, and provide a distribution to TCM’s investors.
“When the market presented the unique opportunity to secure this financing, we aggressively and quickly pursued it for these peaking plants,” said Jay Frisbie, senior vice president for TCM. “These assets were a perfect fit for this financing structure – minimally leveraged and located in a strong market. They can support a conservative amount of leverage and enable us to return value to investors.”
The 656-megawatt (MW) Lincoln Generating Facility near Manhattan, Ill., 328-MW Crete Energy Venture Facility near Crete, Ill., and 850-MW Rolling Hills Generating Station near Wilkesville, Ohio, were included in the arrangements. All are simple-cycle plants that provide electric generating capacity during periods of peak demand for the PJM market, the regional transmission operator that serves much of the Midwest and Mid-Atlantic states.
Frisbie said the refinancing of the three peaker plants followed a successful $455 million refinancing in May for another portfolio of plants managed by TCM. That transaction, which included the 830-MW High Desert Power Project in Victorville, Calif., 300-MW Big Sandy Peaker Plant in Kenova, W.Va., and 250-MW Wolf Hills Energy plant in Bristol, Va., extended the tenor of the prior loan facility under covenant-light terms.
“TCM’s success in the financial market in May drove us to take a hard look at the other power assets we manage,” Frisbie said. “The three peaking plants stood to benefit significantly, and the result is an accelerated delivery of value to investors.”
The Crete and Lincoln facilities came under TCM management as the result of a private equity acquisition from DTE Energy Services Inc. and ArcLight Capital Partners in 2007. The Lincoln plant, which began commercial operation in 2000, is equipped with black start capability, allowing the plant to start up in a blackout without drawing energy from the electric grid. The Crete facility began commercial operation in 2002. The Rolling Hills plant, acquired in 2008 from Dynegy, Inc., began commercial operation in 2003.
“An important factor in TCM’s ability to identify opportunities in the energy and financial sectors is the strength of our team’s long-standing relationships in the financial community and Tenaska’s overall reputation in the industry,” Frisbie said.
Goldman Sachs, Bank of America Merrill Lynch and UBS led the financing.
TCM has approximately $3.5 billion energy assets under management, including more than 4,300 MW of natural gas-fueled electric generating capacity.