Tenaska refinances its new solar electric generating facility

OMAHA, USA: Tenaska has closed financing on its 130-megawatt Tenaska Imperial Solar Energy Center South project through an issuance of $319.4 million of senior secured, long-term notes. The private placement received an investment-grade rating of BBB- by Standard & Poor's and Kroll.

"Tenaska Imperial South is a sound project and the market responded favorably," said Jerry Crouse, CEO, Tenaska Energy Inc. "We saw a significant and positive response to the issuance and appreciate our investors' participation."

Tenaska Imperial South began full commercial operation in early November and has a 25-year power purchase agreement with SDG&E. The project is located near El Centro in California's Imperial Valley, and its nearly 2 million solar panels can generate enough electricity to power approximately 44,000 homes.

At the time of its initial financing in 2012, Tenaska Imperial South was one of the largest solar facilities financed in the U.S. commercial bank market.

An affiliate of Tenaska is the majority owner of Tenaska Imperial South. Prudential Capital Group is acquiring a minority interest in the project, subject to regulatory approvals. Tenaska affiliates will manage the project. RBC Capital Markets, LLC acted as financial advisor to Tenaska on the sale of the equity interest to Prudential Capital Group.

"An attractive market for project debt led us to refinance our existing mini-perm loan," said Dave Kirkwood, Tenaska VP and treasurer. "We hope to build upon the success of this transaction as we look to arrange financing for our next project, Tenaska Imperial Solar Energy Center West."

Tenaska Imperial West, located near Tenaska Imperial South, will produce up to 150 MW of electricity under a 25-year power purchase agreement with SDG&E. Construction of the project is expected to begin in the first half of 2014 with initial commercial operation scheduled for 2015.

Both Tenaska Imperial South and Tenaska Imperial West were developed by TSV, an affiliate of Tenaska focused on developing solar energy projects in the Imperial Valley and North America.

California law requires utilities to procure 33 percent of their power from renewable energy resources and to reduce greenhouse gas emissions to 1990 levels by 2020.

The state's renewable portfolio standards law, combined with the added access to transmission infrastructure, created a favorable market for large-scale solar projects like Tenaska Imperial South.

Barclays acted as lead placement agent for the senior secured notes, and Mitsubishi UFJ Securities Inc. and RBC Capital Markets, LLC served as co-placement agents. Mitsubishi UFJ Financial Group and Royal Bank of Canada are providing letter of credit and working capital facilities.

Riverside Risk Advisors assisted Tenaska in designing and executing its interest rate risk management program.