A $10 million piece of Redbud Energy Project bank debt traded last Thursday at 65 1/2. The name has been trading actively for the past few weeks in the mid 50s (LMW, 4/29). It could not be determined which banks were involved in the trade, but last month Deutsche Bank picked up $50 million of the debt in two separate auctions.
Redbud is owned by InterGen, a joint venture of Royal Dutch/Shell Group and Bechtel Enterprises. The Okla.-based project was funded with $523 million of non-recourse financing, but has struggled since its inception. The credit is priced at LIBOR plus 1 5/8% and according to bankers is still paying interest. Redbud is one of three plants that were built as part of the joint venture. Magnolia Energy Project, which has $425 million of debt, is quoted in the high 50s-low 60s. The third plant is Cottonwood, a Texas-based, natural gas-fired power facility.
InterGen is transferring the three natural gas-fired plants back to the lenders. Observers said a transfer could be initiated some time in the second quarter, possibly leading to an auction of the assets.