Any old Orion?
Despite a short track record, Orion Power Holdings ? a two-year old
Baltimore-based power company ? has attracted over-subscription on
a loan to finance its latest hefty acquisition in the mid-west.
General syndication of a $1.2 billion loan to fund Orion Power MidWest's acquisition of 2614 MW of generating assets from Duquesne Light was recently wrapped up by a primary banking syndicate consisting of Bank of America, Goldman Sachs, Deutsche Bank and Paribas.
Unlike other US power companies, with more diversified international leanings, Orion is exclusively pursuing domestic power acquisitions. Orion agreed to purchase the assets for $1.7 billion, with the balance to be paid down in part by equity financed through a $400 million high yield issue. Moody's Investor Service assigned a Ba3 rating to the 10-year notes issued by Orion Power Holding.
Duquesne Light, the Pennsylvania-based company, opted to quit the generation business and divest its related assets last year to concentrate instead on providing electricity, water and gas services. Orion, having won the assets through a standard auction process, also wins the obligation to provide Duquesne Light with power until 2001, after which it will sell the power in the open market.
The loan incorporates a two-and-a-half year $1.1 billion loan, fully funded at financial close, and a $90 million revolving facility, partially funded at closing. Co-arranger commitments notched in at $125 million while senior managing commitments were pegged at $75 million in primary syndication. General syndication began mid-May.
The debt is priced at 137.5bp over Libor for the first year, rising to 150bp over Libor for the second year and subsequently reaching 200bp above Libor for the first half of the third year.
The loan also flaunts a cash-sharing mechanism whereby, instead of scheduled amortisation payments, a performance-derived percentage of the profits are shared with the lenders.
The Midwest assets consist of seven power generating facilities located in Western Pennsylvania and Ohio. Although Orion acquired the assets from Duquesne, some of the facilities were previously owned by FirstEnergy. All are 30 to 50 year-old base load coal-fired plants, with the exception of one oil-fired peaking facility.
The ease with which Orion secured its lenders can be put down to its recent market successes ? most notably last year's Orion Power New York deal. The enthusiasm of lead arrangers on that deal, Bank of America and Paribas, has been snugly carried over to Duquesne.
Orion has built up its New York State presence with a portfolio of 2613MW of capacity acquired through purchases from Niagara Mohawk Power (NiMo), Consolidated Edison (ConEd) and US Generating (USGen). That deal was backed by a $730 million facility.
There, financing included a $700 million three and a half year loan and $30 million in working capital, the commitment fee of which was 37.5bp. Pricing was at 137.5 bp for each of the first two years, extending to 175bp for the final year-and-a-half. Additionally, Orion chipped in $367 million of equity to the mix.
Senior managing agents on the deal required a $100 million commitment. The 12 banks committed to the deal are ABN Amro, Bank Boston, Bank of Montreal, Bank of Nova Scotia, Bayerische Hypo-und Vereinsbank, CIBC, Cobank, Deutsche Bank, DG, Dresdner Bank, ING and Union Bank of California.
Bank of America and Paribas jointly led the deal with $20 million commitments apiece at the lead manager level, with fees at 30bp.
The New York assets include 72 hydroelectric plants upstate, which muster a total capacity of 655MW, purchased from NiMo for $425 million. The oil and gas-fired ConEd assets consist of the 1090MW Astoria assets, the 494MW Gowanus assets and the 271MW Narrow assets, all purchased for $550 million. Also included in the deal is the 105MW Carr Street plant.
Moody's notes that the base-load heavy portfolio is well maintained and should be financed by further cash injections or refinancings. But it also cautions that the assets are old, possibly subject to environmental regulation, and held by a recently incorporated entity. Accordingly, managing this new force may prove to be Orion's biggest challenge.
Orion will most likely merge Orion Power New York and Orion Power MidWest, as well as future operating companies, into a single entity that will serve as a primary financing vehicle.
But financiers are confident that they will see massive growth from Orion. Hence, the early commitments. Orion's strategy also fits well with banker bias: a tight focus on domestic generation acquisitions that guarantee ample and swift revenue streams.
Orion shares this revenue with the banks and uses it to finance growth and brownfield development.
The company hopes to be among the top 10 generation owners in the US. It needs around another 15,000MW added to its power portfolio to meet this goal. But given its recent successes in a rapidly deregulating power market, this seems a highly feasible objective.
The climate, bankers say, is good for refinancing the MidWest and NewYork deals before the loans mature. With Orion intending to go public within the next two years, the hope is that the original debt will be repackaged so as to diminish the bulk of the refinancing.
Formed in March1998, Orion is comprised of sponsors GS Capital Partners II (a Goldman Sachs private equity arm), Constellation Enterprises (a Baltimore Gas & Electric affiliate), Tepco and Mitsubishi of Japan.
Along with Reliant's recent Sithe asset acquisition, Orion is set to become one of the more significant chunks of US power financing to energize this year's market.
General syndication of a $1.2 billion loan to fund Orion Power MidWest's acquisition of 2614 MW of generating assets from Duquesne Light was recently wrapped up by a primary banking syndicate consisting of Bank of America, Goldman Sachs, Deutsche Bank and Paribas.
Unlike other US power companies, with more diversified international leanings, Orion is exclusively pursuing domestic power acquisitions. Orion agreed to purchase the assets for $1.7 billion, with the balance to be paid down in part by equity financed through a $400 million high yield issue. Moody's Investor Service assigned a Ba3 rating to the 10-year notes issued by Orion Power Holding.
Duquesne Light, the Pennsylvania-based company, opted to quit the generation business and divest its related assets last year to concentrate instead on providing electricity, water and gas services. Orion, having won the assets through a standard auction process, also wins the obligation to provide Duquesne Light with power until 2001, after which it will sell the power in the open market.
The loan incorporates a two-and-a-half year $1.1 billion loan, fully funded at financial close, and a $90 million revolving facility, partially funded at closing. Co-arranger commitments notched in at $125 million while senior managing commitments were pegged at $75 million in primary syndication. General syndication began mid-May.
The debt is priced at 137.5bp over Libor for the first year, rising to 150bp over Libor for the second year and subsequently reaching 200bp above Libor for the first half of the third year.
The loan also flaunts a cash-sharing mechanism whereby, instead of scheduled amortisation payments, a performance-derived percentage of the profits are shared with the lenders.
The Midwest assets consist of seven power generating facilities located in Western Pennsylvania and Ohio. Although Orion acquired the assets from Duquesne, some of the facilities were previously owned by FirstEnergy. All are 30 to 50 year-old base load coal-fired plants, with the exception of one oil-fired peaking facility.
The ease with which Orion secured its lenders can be put down to its recent market successes ? most notably last year's Orion Power New York deal. The enthusiasm of lead arrangers on that deal, Bank of America and Paribas, has been snugly carried over to Duquesne.
Orion has built up its New York State presence with a portfolio of 2613MW of capacity acquired through purchases from Niagara Mohawk Power (NiMo), Consolidated Edison (ConEd) and US Generating (USGen). That deal was backed by a $730 million facility.
There, financing included a $700 million three and a half year loan and $30 million in working capital, the commitment fee of which was 37.5bp. Pricing was at 137.5 bp for each of the first two years, extending to 175bp for the final year-and-a-half. Additionally, Orion chipped in $367 million of equity to the mix.
Senior managing agents on the deal required a $100 million commitment. The 12 banks committed to the deal are ABN Amro, Bank Boston, Bank of Montreal, Bank of Nova Scotia, Bayerische Hypo-und Vereinsbank, CIBC, Cobank, Deutsche Bank, DG, Dresdner Bank, ING and Union Bank of California.
Bank of America and Paribas jointly led the deal with $20 million commitments apiece at the lead manager level, with fees at 30bp.
The New York assets include 72 hydroelectric plants upstate, which muster a total capacity of 655MW, purchased from NiMo for $425 million. The oil and gas-fired ConEd assets consist of the 1090MW Astoria assets, the 494MW Gowanus assets and the 271MW Narrow assets, all purchased for $550 million. Also included in the deal is the 105MW Carr Street plant.
Moody's notes that the base-load heavy portfolio is well maintained and should be financed by further cash injections or refinancings. But it also cautions that the assets are old, possibly subject to environmental regulation, and held by a recently incorporated entity. Accordingly, managing this new force may prove to be Orion's biggest challenge.
Orion will most likely merge Orion Power New York and Orion Power MidWest, as well as future operating companies, into a single entity that will serve as a primary financing vehicle.
But financiers are confident that they will see massive growth from Orion. Hence, the early commitments. Orion's strategy also fits well with banker bias: a tight focus on domestic generation acquisitions that guarantee ample and swift revenue streams.
Orion shares this revenue with the banks and uses it to finance growth and brownfield development.
The company hopes to be among the top 10 generation owners in the US. It needs around another 15,000MW added to its power portfolio to meet this goal. But given its recent successes in a rapidly deregulating power market, this seems a highly feasible objective.
The climate, bankers say, is good for refinancing the MidWest and NewYork deals before the loans mature. With Orion intending to go public within the next two years, the hope is that the original debt will be repackaged so as to diminish the bulk of the refinancing.
Formed in March1998, Orion is comprised of sponsors GS Capital Partners II (a Goldman Sachs private equity arm), Constellation Enterprises (a Baltimore Gas & Electric affiliate), Tepco and Mitsubishi of Japan.
Along with Reliant's recent Sithe asset acquisition, Orion is set to become one of the more significant chunks of US power financing to energize this year's market.
Request a Demo
Interested in IJGlobal? Request a demo to discuss a trial with a member of our team. Talk to the team to explore the value of our asset and transaction databases, our market-leading news, league tables and much more.