Terra-Gen Power closes $1.2B construction financing and wind turbine order to launch nation—s largest wind farm

NEW YORK — Terra-Gen Power, LLC, announced that it has closed a $1.2 billion financing for four wind power projects with a total of 570 megawatts (MW) of capacity at its Alta Wind Energy Center in Kern County, Calif. The four projects, known as Alta Projects II-V, will use 190 V90-3.0 MW turbines manufactured by Vestas-American Wind Technology, Inc.

The Alta Wind Energy Center is a 3,000 MW wind power development initiative. Along with the 150 MW Alta Project I utilizing GE turbines, which closed financing and commenced construction in March 2010, this financing puts Terra-Gen well on its way to completing what is anticipated to be the largest wind energy farm in the nation.

The $1.2 billion financing for the Alta Projects II-V included the issuance of approximately $580 million of pass through certificates due 2035 via a Rule 144A offering, a construction bridge loan facility of $499 million, and ancillary credit facilities of $127 million. Proceeds from the certificates and bridge loans will be used to fund construction of the projects.

Citi, Barclays Capital, and Credit Suisse acted as joint book-running managers for the issuance of the pass through certificates, and Mitsubishi UFJ Securities, Credit Agricole Securities, ING, and Rabo Securities acted as co-managers. MUFG Power & Utilities Group, Credit Agricole, ING Capital, Rabobank, Citi, Barclays, and Bank of Montreal provided the credit facilities, with Credit Agricole acting as administrative agent and MUFG Power & Utilities Group, Credit Agricole, ING Capital, Rabobank, Citi, and Barclays acting as joint lead arrangers.

The permanent financing of Alta Projects II-V is structured as a leveraged lease whereby Citibank, N.A. has committed to purchase the projects at the start of commercial operations and lease them back to Terra-Gen. Terra-Gen will continue to manage and operate the wind projects under long-term agreements.

“We believe this transaction is the first to be structured as a leveraged lease in the wind space as well as the first 144A bond issuance for wind assets since 2005. We are hopeful that these benchmarks will expand the capital base available to fund future growth in the renewables sector,” said John O’Connor, CFO of Terra-Gen.

The Alta Wind Energy Center is expected ultimately to provide up to 3,000 MW of pollution-free electrical generating capacity, 1,550 MW of which will fulfill a power purchase agreement signed with Southern California Edison in 2006. With 720 MW of wind power, the initial five projects will increase the installed wind capacity in California by more than 25 percent and deliver enough clean, renewable energy to supply up to 200,000 homes.

“The Alta projects I-V will create more than 1,500 domestic manufacturing, construction and operation and maintenance jobs, and inject more than $600 million into the local economy,” said Jim Pagano, CEO of Terra-Gen.

Project construction is expected to begin immediately, with commercial operation anticipated in the first and second quarters of 2011. Delivery and commissioning of the Vestas turbines will begin in Oct. 2010. Alta Project I is anticipated to begin commercial operations in Jan. 2011.