The C$160 million in financing has been secured from a public-private consortium of institutional investors, with Mutual Life of Canada acting as financial agent and co-lead lender. The senior secured term notes provide ELN with a construction loan, which will be converted to long term financing with an all inclusive term of 23 years. The non recourse loan package is financed at an undisclosed fixed interest rate. Probyn & Co of Toronto is serving as financial adviser to the lenders.
The financing group assembled by Probyn and Mutual includes as co-lead lender the Ontario Municipal Employees Retirement System (OMERS), Canada's third largest pension fund. "The combination of low technology risk, strong lending and equity partners, the long term power contracts with Hydro-Quebec and favourable investment return led to the OMERS decision to invest," says portfolio manager Lynn Burgess of the pension fund.
Another lender is Capital d'Amerique CDPQ, a unit of the Caisse de depot et placement du Quebec, the leading public fund manager in Canada, which was created by the Quebec government in 1965. Further lenders include three Canadian life insurance carriers: Sun Life Assurance Co of Canada, The Manufacturers Life Insurance Co and Industrial-Alliance Life Insurance Co.
Turbines going on line
Ground breaking at the site began in May and in mid August the construction team was confident that the first ten wind turbines would be up by the end of the month. When complete, the power station will comprise 133, 750 kW NEG Micon turbines. According to Yvant Dupont of Axor, one of the ELN backers, the first 57 MW phase is on schedule for completion at Cap-Chat by December 1 and the final 57 turbine phase is scheduled for construction at Matane by December 1, 1999.
The financing is rated "investment grade" (B++) by the Canadian Bond Rating Service, a first for wind in Canada. The rating is CBRS's opinion on the likelihood of full and timely repayment of all interest and principal on the loan. "The Micon people are very focused and Micon has through the years shown good reliability and good performance characteristics," says CBRS vice president Ihor Kotz.
Aware of Kyoto
" Financing of Le Nordais demonstrates the growing maturity of the renewable energy sector in Canada," adds Stephen Probyn. The financing is also an indication that the investors believe they should be hedging their bets with regard to global warming. "The closing of this financing is an important moment for renewable energy in Quebec and Canada, especially in view of the Kyoto commitment," according to Bruce Woodman of M&N Wind Power, another of the project's backers.
Behind ELN are the Axor Group Inc of Montreal, M&N Wind Power Inc of London (comprising NEG Micon of Denmark, Nichimen of Japan and 3Ci of Quebec), and Northland Power Inc of Toronto. ELN holds two 50 MW contracts to supply electricity to Hydro-Quebec for 25 years. According to Kotz, wind power technology has "much improved" since the bankruptcy in 1996 of the company which initiated the Gaspe project, Kenetech Windpower of California. ELN was formed to take over the Kenetech contracts.