Financing for Noble's latest New York State wind farm portfolio reached its US$1.18 billion financial close on 30 June.

Unlike the proceeding portfolio that was closed last year - and subsequently scooped IJ's award for renewables deal of the year (IJ News, 29 February 2008 ) - the road to financial close was not without its potholes.

Days before the transaction closed, BNP Paribas stepped out of the deal to be replaced at the last minute by Spain's BBVA.

Now that the transaction has closed, all eyes are turned towards the ability of the lenders to bring about a successful syndication.

The past: 2006 portfolio

As the sponsor's first foray into the renewables arena [Transactions Database] represents an increase in both project value and capacity. As the largest portfolio financing in the US and the second largest renewables transaction in the world to close in the first half of the year, Noble's ambitions appear far from waning.

Projects in the portfolio:

• 97.5MW Altona Windpark
• 106.5MW Chateaugay Windpark
• 126MW Wethersfield
• 21MW Bellmont Windpark

Noble Environmental Power, owned by JPMorgan (66.2 per cent) and CCMP Capital Partners (21.2 per cent), acted as the portfolio's sole sponsor.

GE Energy Financial Services announced that it would invest a total of US$100 million in the projects after financial close was reached.

Four banks - Citigroup, HSH Nordbank, RBS and BBVA - provided equal amounts in:

• a US$440 million term loan with a 15-year tenor after conversion
• a US$631.77 million bridge facility with a one-year tenor (expires 31 March 2009)
• a US$109 million letter of credit with a tenor of seven-years post-conversion

CP Energy Group provided financial advisory services. On the legal side, Fulbright & Jaworski acted for the County of Franklin Industrial Development Agency, Latham & Watkins for the sponsor and Milbank for the lenders.

Noble Environmental Power executed a 10-year fixed-for-floating financial busbar swap with Citigroup Energy, fixing the energy price for a pre-defined level of the production portfolio.

Financial turbulence

The original lending set included Citigroup, HSH Norbank, RBS and BNP Paribas.

Shortly before the deal reached financial close BNP Paribas exited leaving a US$295 million hole in the financing.

Sources close to the deal cited internal credit issues as the cause of the exit. Credit approval was achieved by the BNP team but consent expired before financial close was achieved. The team failed to act on this and were consequently forced to walk out of the transaction.

BBVA stepped in at the last minute to take BNP Paribas' share and carry the deal across the finishing line.

Looking ahead

Despite issues surrounding the deal in the pre-financial close stage, the portfolio is likely to attract significant interest from banks at the syndication stage which is expected to close within the next two weeks.

BBVA's eagerness  to enter the deal so late in the day is a tribute to the strength of the assets being underwritten and syndication banks are likely to be lining up to take a role in the large portfolio.

Looking further ahead, Noble may well set its sights on financing a new portfolio either for New York or beyond.

Noble's team - which includes three ex-GE employees - originated in Connecticut before being drawn across the border into New York by the prospect of good wind resources.

When the company first submitted plans for its projects, it was forced to labour under the inexperience of the New York State Historic Preservation Office which hadn't dealt with wind power projects previously.

The state's largest existing project - Maple Ridge wind farm - was fast-tracked through permitting and Noble faced a rule regime which was generally conceptual and hadn't been tested.

The situation for new projects in the state has certainly evolved beyond this starting point.

Should Noble deem New York State no longer a place ripe for fresh wind development, experience garnered from the first two portfolios puts it in good stead to pursue opportunities in neighbouring states with similarly favourable wind resources.

However, detailed plans on future portfolios are hard to come by as the company has recently filed an S-2 registration statement with the SEC in preparation for its floatation on the stock exchange. Noble is required to keep its plans concealed as part of this quiet period.

Nevertheless, with the wind behind it from two successful portfolio financings, Noble is unlikely to hold back the pace of its projects now.

The portfolio at a glance