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Allco pulls out of Tehachapi

Less than two years in the American wind power market, Australia's troubled Allco Finance Group has pulled out of one of the most promising wind developments in the US, in the Tehachapi area of southern California, selling an operational 24 MW wind plant and a development portfolio of as much as 3100 MW. The projects were originally developed by Oak Creek Energy Systems (now owned by Japanese Marubeni company). The 24 MW Alite wind plant is among the first to use Vestas 3 MW turbines in the US and sells its power directly to a nearby concrete factory in a "behind the metre" contract unique in America. The project portfolio includes land rights, secured positions in the queue for transmission and a long term power purchase agreement with Southern California Edison for delivery of power from 1550 MW of wind capacity. Projects cannot be built, however, until new transmission lines are in place. These are not expected to be fully complete until 2013 at the earliest. With Allco weakened by the global credit crisis, it has been unloading its global wind assets to reduce debt and raise cash. "It is disappointing to have to divest a one-of-a-kind project like Tehachapi. Nonetheless, we are pleased with the financial results of the sale," says Allco's Nick Bain. It acquired the assets in February 2007. They were sold for $325 million to a consortium of Terra-Gen Power and ArcLight Capital Partners. The sale has resulted in an anticipated after tax net proceeds for Allco of about $141.5 million, as well as releasing Allco from related debt commitments of $59 million. Allco has also sold its Australian wind assets (page 24).

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