The Dominican Republic has been changing its power matrix since the start of the century and global energy company AES has played a major supporting role.
US-headquartered AES has been in the Dominican Republic since 2000, helping to build out the country’s energy infrastructure to keep up with demand and address the needs of the energy transition.
“I think we have been the most influential private investor in terms of transforming the energy mix on the island,” says Jeff MacKay, AES’s CFO for Mexico, Central America and the Caribbean. “We have helped push the country away from heavy fuel oil.”
The company began with LNG infrastructure and thermal power generation and has moved into renewable energy over the years. Its latest Dominican venture will see the construction of three solar plants that will add a total of 240MW, and the refinancing of short-term debt for three existing wind and solar facilities with total installed capacity of 150MW.
The $480 million financing for the generation portfolio, which wins the award for Infrastructure Financing of the Year – Caribbean, is the largest renewable energy financing to date in the Caribbean.
The deal consisted of a 7-year $369 million mini-perm IDB Invest A/B Loan; and a one-year $27 million standby letter of credit to support a debt service reserve account. The transaction also had over US$300 million in interest rate swaps. The sponsor contributed roughly $85 million in equity.
The A/B loan, led by IDB Invest, was also the largest syndicated loan to date in the Caribbean and financial institutions. It consisted of a $36.8 million A Loan from IDB Invest and $331.4 million in B Loans from 21 financial institutions.
IDB Invest, together Bladex, JP Morgan and Scotiabank, led the underwriting process as joint lead arrangers and joint bookrunners for a transaction that was twice oversubscribed with more than $485 million in orders.
“This financing allowed us to efficiently raise capital for 390MW of solar and wind power. It is an enabler for a meaningful amount of solar to help complement existing gas assets and start to accelerate the [energy] transition in the Dominican Republic,” says MacKay.
Several factors played into the decision to work with IDB Invest over other alternatives, says MacKay. “It is good to have a partner among the multilaterals. They are a critical partner in radical landscape shifts in different markets,” he says adding that their new partnership could now help “accelerate the energy transition” across the region.
AES has 700MW in thermal generating capacity in the Dominican Republic, as well as a storage facility, regasification plant, 50 kilometers of pipelines and a trucking facility. It sells part of the LNG it imports to other generating companies.
The company has a pipeline of another 500MW in renewable energy in the country. MacKay says he expects future projects to be wrapped into to the current financing vehicle.
“Our hope is that when those projects are ready they will be plugged into this facility, so this facility would be opened and upsized to accommodate those projects as well,” he says.
AES Dominicana $450 million Renewables Financing
Sponsors: AES Corporation; AES Dominicana Renewable Energy S.A.; Agua Clara S.A.S and I.E. DR Projects I, S.R.L
Joint Lead Arrangers: Bladex; IDB Invest; JP Morgan; Scotiabank
Consultants: ERM (E&S); Grupo Mercados Energeticos (market); KPMG (tax); Marsh (insurance); UL Solutions (engineer)
Lenders’ Counsel: Clifford Chance; Pellerano Nadal
Sponsor’s Counsel: Paul Hastings
Managers, Arrangers and B Lenders: Banco Aliado; Banco Continental SAECA;
Banco General; Banesco; Banistmo; Bank of China; BHD International Bank; Banco Lafise Panama; CIBC; Banco Ficohsa; First Caribbean International Bank; Global Bank; ILX Fund I Sub-Fund A; Metrobank; Multibank; Republic Bank
All supporting financial institutions and law firms were transmitted to LatinFinance by the award category winners. For updates please email awards@latinfinance.com