Milbank, Tweed, Hadley & McCloy has represented Morgan Stanley as the debt provider to finance construction of a major new wind farm under development in Carson County, near Amarillo, Texas.
The 182 MW Panhandle 2 Wind Project, which Pattern Energy Group has agreed to acquire from its majority shareholder, Pattern Energy Group LP (“Pattern Development), will be part of Texas’s new Competitive Renewable Energy Zone. E
xpected to be operational in the fourth quarter of 2014, the Panhandle 2 facility will connect to the state’s main power grid, generating wind power from 79 Siemens 2.3 MW SWT-2.3-108 wind turbine generators.
Morgan Stanley is providing a construction loan facility and equity bridge loan facility along with a letter of credit. Pattern Energy, together with three institutional tax equity investors, will acquire Panhandle 2 upon completion of construction. Morgan Stanley Capital Group is providing an energy hedge, which offers greater certainty for the project’s projected cash flows from wholesale power sales; Morgan Stanley Capital Group is also acting as the collateral agent for the senior secured creditors.
Milbank represented Morgan Stanley Bank, both as the construction lender and as letter of credit issuer, and Morgan Stanley Senior Funding as the administrative agent and as equity bridge lender.
Milbank project finance partner Allan Marks led the deal team on behalf of the lenders.
Marks says: “By creatively bringing together multiple financing techniques into a single package – including construction loans, equity bridge loans, and an energy hedge from Morgan Stanley; tax equity from three different sophisticated investors; and strategic equity from Pattern Energy – the project will bring online clean, renewable power at a favourable cost of capital and with an efficient allocation of risks, benefitting all stakeholders.”
