Teco Power Services and Panda Energy International are seeking $2.2 billion in loans to finance construction of 4,400 MW of greenfield generation capacity in Arizona and Arkansas, according to Power Finance & Risk, an LMW sister publication. The facility, led by Citibank and Société Générale, comprises a $1.7 billion, five-year bullet loan and a $500 million equity bridge loan, according to Linda Miller, senior v.p.-finance at Teco in Tampa. Officials at Citibank, Société Générale and Panda did not return calls.
Miller said the two co-leads are approaching banks to market co-arranger slots. A project finance banker expects contributions at the co-arranger level to stand between $60-90 million. "The only thing that will give people heartburn in this deal is that its darn big," he quipped. Financing is expected to close in June.
Teco and Panda will use the proceeds to build two identical 2,200 MW natural gas-fired power plants in Arizona and Arkansas. The El Dorado facility, located in southern Arkansas, and the Jila River project, in Arizona, will begin commercial operation late next year.
Teco's Miller believes banks will sign up for the deal, despite the proliferation of jumbo deals, such as the Calpine II $2.5 billion construction facility, which recently closed, or NRG North America's own $2 billion construction facility. The reason, she argued, is that since both plants are identical the transaction is relatively straightforward despite its size. "It is a jumbo deal," she explained, "but it is a little more vanilla...it is something banks can put their arms around."