The Eu636 million ($902 million) 20-year debt facility for Torresol Energy finances a project that uses some of the most advanced solar technology – thermoelectric solar technology, through parabolic trough collectors, with a molten salt storage system that enables the generation of electricity for over seven hours when there is no solar irradiation. From an environmental perspective the project also represents a step forward and will avoid the emission of 90.000 tons of CO2 per year.

The Eu697 million Valle 1&2 project (previously known as Arcosol Termesol) will be able to generate 2x50MW with a total capacity of approximately 340Gwh/year. Sited around Cadiz, Spain, the construction period is scheduled to last two years and both plants are expected to be operational at the end of 2011.

The sponsor, incorporated in March 2008, is a relative newcomer and has closed one previous deal – Gemasolar. Nevertheless, its parents are Masdar (40%), a subsidiary of Mubadala which is owned by the government of Abu Dhabi, and Spanish engineering group Sener (60%), both familiar and respected names in the project debt market. Conditions precedent pertaining to successful tariff registration were also inserted to get the deal done.

Lead arranged by Banco Santander and La Caixa, but ultimately financed on a club basis, the deal comprises Eu540 million of 20-year senior debt (including two years construction) and a 36-month Eu96 million VAT facility. The senior debt pays 300bp over Euribor during the 30-month construction period and 355bp post-construction, and amortises semi-annually.
The debt was provided by Santander (Eu112 million), La Caixa (Eu112 million), BBVA (Eu104 million), Instituto de Credito Oficial (Eu103 million), Caja Madrid (Eu93 million), Banco Popular Espanol (Eu56 million) and Banesto (Eu56 million). The minimum DSCR is 1.2x and the debt to equity ratio is 78/22.

Valle 1&2 is a significant achievement given the new technology and high bank takes compared with other solar projects.
Furthermore the deal amanged to avoid adopting a mini-perm structure – standard project finance fare in the Spanish market, particularly in the troubled financial climate of 2009 – and pushed for a long term tenor.

Valle 1 & 2
Status: Financial close 24 July 2009; signed January 2010
Description: 2x50 MW solar project with thermal molten salts storage system and SENERtrough collector loops
Sponsor: Torresol Energy (Sener and Masdar joint venture)
Lead arrangers: Banco Santander; La Caixa; BBVA; Caja Madrid; ICO; Banesto; Banco Popular
Sponsor legal counsel: Latham & Watkins
Lender legal counsel: Jones Day
Consultants: ALATEC; AON; PwC
EPC Contractors: Sener; ACS Cobra