The Japan Bank for International Cooperation (JBIC) has signed a loan agreement of up to US$2.1bn with Crimson Power Holdings Company in the Philippines. The loan, provided for project financing, was co-financed with Sumitomo Mitsui Banking Corporation (SMBC) and Mizuho Corporate Bank. JBIC has also provided a political risk guarantee for the co-financed portion.
The loan will help CPHI to acquire interests in three thermal power plants, with a power capacity totalling 2,203MW, from the Mirant Corporation, a US company, CPHI will participate in the long-term operations of these projects.
This is the first project finance loan JBIC has provided for the acquisition of a portfolio of power projects, in which repayments will be funded by revenues generated from multiple projects’ operations. The loan is also the first synthetic acquisition finance for JBIC that comprises both senior and mezzanine finance.
The three existing thermal power plants constitute a major source of electrical power in Luzon Island, accounting for roughly 20% of the island’s total power generation capacity. The demand forecast released by the government of the Philippines in August 2006, estimated a 46% increase in the island’s electricity demand from 2005 to 2014.
Tepco and Marubeni will contribute to a stable supply of electrical power in the Philippines, by using the expertise and plant operation knowledge they have accumulated from domestic and international power projects.
Recently there have been an increasing number of business transactions for the acquisition of interests in existing international independent power producer (IPP) projects, as US and European IPP project developers have been scaling down on business operations overseas. This development is regarded by the Japanese companies as a new business opportunity and is the third project finance loan JBIC has provided to help Japanese companies acquire interests in existing IPP projects.