115 megawatt El Arrayan wind power project being developed by Pattern Energy, AEI and Antofagasta; Milbank counsel to Bank of Tokyo-Mitsubishi, Credit Agricole, Sumitomo Mitsui and EKF as lenders.
In its latest renewable energy financing in Latin America, Milbank, Tweed, Hadley & McCloy LLP represented a group of international lenders in providing $225 million in financing for the development of Chile’s largest wind farm.
Leading U.S. wind energy and transmission company Pattern Energy Group LP is developing the El Arrayan wind turbines project along with AEI and Chile’s Antofagasta Minerals S.A. The project is located some 250 miles north of Santiago along Chile’s Pacific coastline. Siemens is providing approximately 50 wind turbines. When it begins commercial operation in 2014, El Arrayan will deliver 115 megawatts of energy.
Milbank was counsel to the lender group providing construction financing, a 15-year term loan, and a letter of credit facility. The bank group included Bank of Tokyo-Mitsubishi UFJ, Credit Agricole and Sumitomo Mitsui Banking Corp. Milbank also advised Eksport Kredit Fonden (EKF), Denmark’s official export credit agency, which provided guaranteed loans to the project through its ELO program.
Separately, Chile’s CorpBanca provided a $20 million subordinated loan facility to finance value-added tax payments by El Arrayan.
‘Chile is becoming an increasingly significant market for developing viable sources of renewable energy in the Americas, particularly in the area of wind power,’ said Milbank project finance partner Allan Marks, who led the deal team. ‘We’re very pleased to have worked with BTMU, Credit Agricole, SMBC and EKF in structuring and closing the long-term financing for the El Arrayan project, which should become a major source of clean energy in Chile.’ He noted that Chile has set an ambitious goal of generating one-fifth of its energy from renewable sources by the year 2020.
Mr. Marks has worked on the financing and development of more than four gigawatts of renewable and other power projects in the United States, Latin America, Europe and Asia. He has also advised on other major project financings in Chile, including the privatization of Chile’s Santiago International Airport and the Autopista Central toll road in Santiago.
Also advising the El Arrayan lenders were Milbank partners Eric Moser (alternative investments) and Andrew Walker (tax), along with associates Christopher Chwang, Franciso Luna, Marco McClees and Lisa Montague (project finance); Jonathan Grossberg (tax); and Brian Lee (alternative investments); and international attorney Hernando Becerra.
‘El Arrayan is a prime example of how major developers are expanding internationally for renewable energy projects, particularly in Latin America,’ Mr. Marks added. ‘This is especially true as the U.S. market is starting to slow due to expiring government incentives, including cash grants and the production tax credit for new wind power projects.’
Milbank, Tweed, Hadley & McCloy LLP is a leading international law firm providing innovative legal solutions to clients throughout the world for more than 140 years. Milbank is headquartered in New York and has offices in Beijing, Frankfurt, Hong Kong, London, Los Angeles, Munich, Sao Paulo, Singapore, Tokyo and Washington, DC.
Milbank’s Latin America Practice Group is one of the most successful and diverse in the region. For the past three years, Milbank has been named the Top Project Finance Law Firm in Latin America by Chambers. The group’s attorneys have advised clients on some of the largest and most innovative transactions across the Americas, including Argentina, Brazil, Chile, Colombia, the Dominican Republic, Mexico and Peru. Attorneys in the group specialize in securities, M&A, project finance, private placements, litigation & arbitration.
Wind power in Chile
2002: 1 MW (- %)
2003: 2 MW (+100 %)
2004: 2 MW (- %)
2005: 2 MW (- %)
2006: 2 MW (- %)
2007: 20 MW (+900 %)
2008: 20 MW (- %)
2009: 168 MW (+740 %)
2010: 172 MW (+2.4 %)
2011: 205 MW (+19.2 %)
By José Santamarta, www.milbank.com
