The Federal Energy Regulatory Commission on July 15 approved a May 20 application from La Paloma Generating Co. LLC for approval of a transaction in which La Paloma will dispose of jurisdictional facilities through the transfer of indirect equity interests in La Paloma to Old Clem Investments II LP from Trust Company of the West (TCW), which holds the interests as trustee for the benefit of The Boilermaker-Blacksmith National Pension Trust.
This now-approved transaction will result in Old Clem indirectly owning 20.14% of the equity interests in La Paloma.
La Paloma owns a 1,022-MW combined cycle facility located in Kern County, California. The La Paloma Facility is interconnected to the transmission system owned by Pacific Gas and Electric in the California Independent System Operator (CAISO) market. CEP La Paloma Operating Co. LLC (CEP) serves as operator and asset manager of the La Paloma Facility with the assistance of RC La Paloma Management LLC. NAES Corp. serves as Operations and Maintenance support manager for the La Paloma Facility. La Paloma’s sole member is La Paloma Acquisition Co. LLC (La Paloma Acquisition), which is the issuer of the membership interests in La Paloma to upstream owners.
EIG Energy Fund/MS Blocker (La Paloma) LLC currently owns 52.3% of La Paloma Acquisition. La Paloma Blocker is owned by certain funds and trusts managed or advised by EIG Management Co. LLC (EIG), or certain of EIG’s affiliates (EIG Funds), and Morgan Stanley & Co. Inc. The remaining interests in La Paloma Acquisition are owned by investors and those interests will not be affected by the proposed transaction.
TCW holds the indirect equity interests in La Paloma for the benefit of Boilermaker-Blacksmith as a trustee pursuant to an Individual Trust Agreement between Boilermaker-Blacksmith and TCW. These equity interests are currently controlled by EIG.
First Reserve Old Clem GP II Ltd. is the general partner of Old Clem and will manage the investments held by Old Clem. Old Clem’s sole limited partner is Boilermaker-Blacksmith. First Reserve Old Clem GP II is owned by its shareholders, each of whom owns less than 10% of the outstanding capital of Old Clem and is a senior officer of First Reserve, a private equity firm.
First Reserve is affiliated with entities that own, operate or control generation capacity or transmission facilities in the CAISO market. Specifically, First Reserve is affiliated with: Crockett Cogeneration, which owns 247 MW; Badger Creek Ltd., Bear Mountain Ltd., Chalk Cliff Ltd., Live Oak Ltd. and McKittrick Ltd., which each owns 46 MW; Double C Generation LP, High Sierra Ltd. and Kern Front Ltd., which each owns 49.8 MW; and Corona Energy Partners, which owns 47 MW.
The proposed transaction will be effectuated pursuant to a Portfolio Transfer Agreement under which TCW will assign to Old Clem a portfolio of various investments held by it for the benefit of Boilermaker-Blacksmith and currently being sub-advised by EIG, including interests in La Paloma.