Power Player Patches up Project Club

Pacific Hydro, an Australian power sector sponsor, is seeking participants for a $212m Chilean hydropower facility after two of its main lenders – ING and BNP Paribas – dropped out in the final stages of club syndication. A banker at one of the shops declines to comment, noting only that generally, banks are being very judicious with capital. Bankers away from the two shops speculate lack of funds and a general retrenchment at the Dutch and French banks led to the decision to pull out. Pacific Hydro’s 4-bank club –Calyon, SocGen, WestLB and DnB Nord – now seeks at least one more lender to join the deal and plug a $40m gap. The facility has a 14-year tenor, including 2 remaining years of construction, which began in 2008. Pricing is heard starting at around 325bp over Libor, stepping up. Working in favor of the club is the fact that the project, called Chacayes, is financed with more than 50% equity from the sponsor, and that a solid offtaker, Endesa Chile’s Chilectra, has already signed a contract. The challenge will be to convince participants to enter the 14-year final deal, apparently the longest tenor in the pipeline of active LatAm deals today.