By Andrew Lee, London & Richard A. Kessler, Fort Worth
Monday, February 24 2014
Updated: Monday, February 24 2014
Indian wind group Suzlon plans to take control of the 240MW Big Sky wind farm in the US from bankrupt Edison Mission Energy (EME) – then immediately sell it on to developer EverPower, Recharge has learned.
The plan is revealed in an application from all three parties to the US Federal Energy Regulatory Commission (FERC) asking the federal body to approve the two-stage transaction under an expedited process concluding before 5 March.
That is the date on which Suzlon hopes to conclude part one of the deal, and take over ownership of the Illinois wind farm from the bankrupt EME.
The submission to FERC continues: “Shortly thereafter, but within 120 days, under the second part of the transaction, Suzlon will sell and EverPower will acquire the membership interests of Big Sky from Suzlon, as well as the related interconnection facilities, contracts, books and records associated with the wind facility.”
FERC regulates all interstate transmission of electricity.
The trio of applicants state that the quick-fire approval of the deal would have “no adverse effect on competition, rates, or regulation” and would be in the best interests of all parties.
Suzlon has spent more than a year trying to recover more than $200m it advanced to the now-bankrupt EME to buy its turbines for Big Sky.
The company recently said it expects to recover less than half that sum, but declined to comment on the progress of negotiations when contacted by Recharge last week, citing confidentiality.
According to the plan set out to FERC, Suzlon holds “a first priority mortgage lien” on Big Sky which secures the non-recourse debt.
The document continues: "In order to move the transaction forward, Suzlon must first acquire Big Sky from EME for a nominal price, and in exchange, Big Sky’s debt will be forgiven.
“Accordingly, the second part of the transaction between Suzlon and EverPower is to be structured in a fashion that preserves Suzlon’s losses related to the forgiveness of the debt.”
The Big Sky saga has been a headache for Suzlon, which has its own debt issues to resolve.
EverPower currently has six operational wind farms with a total capacity of 512MW, according to its website. The developer is owned by UK-based private equity group Terra Firma.
EME has reached an agreement to sell most of its assets to independent power producer NRG Energy for $2.64bn, including 1.7GW of wind capacity.