Prudential Capital Group jointly structured this unique debt transaction with Santander, which provided $295 million in short-term financing, in addition to Prudential Capital Group’s long-term financing, and $50 million from other institutional investors.
“In the current market environment where capital availability is tight, being creative and flexible is critical when it comes to helping companies expand and develop new projects,” said Ric Abel, managing director of Prudential Capital Group’s Energy Finance Group. “Our partnership with Santander on this transaction is a great example of private capital and banks working together to make large projects a reality.”
LS Power will use the capital to construct and operate Arlington Valley Solar Energy II, a 127-megawatt solar photovoltaic power generation facility situated on 1,200 acres in Maricopa County, Ariz. The company will sell all generated power to San Diego Gas & Electric as part of a 25-year power purchase agreement. Once completed, the project is expected to annually generate more than 275,000 megawatts of power in the first year of operation. Construction is scheduled to begin during the first quarter of 2012.
“This two-tranche financial solution aligns sponsors, banks and institutional investors’ interests,” said Jorge Camina, head of project & acquisition finance U.S. of Santander Global Banking & Markets. “It optimizes project capital structure, locks financing cost and extracts the full value of the long-term power purchase agreement, while appealing simultaneously to both the institutional and bank markets. Having Prudential as a partner has been crucial in developing a successful template. We expect many projects will follow the innovative path initiated by LS Power.”