Complete Energy Holdings plans on financing its acquisition of the 1,021 MW La Paloma Generating via the term loan "B" market. The investment boutique will pay upfront $560 million in cash for the plant plus potential adjustments of $50 million, but hopes to take out debt representing about 70% of the cost, Milton Scott, managing director of Complete Holdings in Houston, told LMW sister publication Power Finance & Risk. WestLB is said to be among the lead participants involved in the finance arrangement that could include an additional one or two financial institutions getting lead designations.
Milton declined to verify that WestLB's involvement deal or discuss financing specifics even though WestLB was vocal about handling the deal. "This is not coincidental that we won this business. We've been working hard to develop the B-loan portion of our business," says Tom Murray, managing director at WestLB, noting that this deal marks WestLB's first foray into term loan "B" arena. The debt will most likely consist of a first and second lien structure including a term loan, a revolver and letters of credit, market watchers say. Murray declined to comment further.
Issuing debt that involves a term loan is the most likely route for the Houston boutique because of the merchant nature of the facility, says Scott. Two of the plant's four units are contracted to Southern California Edison under a tolling agreement that will last for another two years. The rest of the plant is merchant but Scott is hoping to contract the rest of the output via financial institutions. Officials at Goldman and Morgan declined to comment.