Cape Wind advances financing

Overlooking Nantucket Sound, proposed location for Cape Wind project.

Overlooking Nantucket Sound, proposed location for Cape Wind project.

Cape Wind and The Bank of Tokyo-Mitsubishi UFJ (BTMU) have added Natixis and Rabobank to serve as lead arrangers for syndication of senior debt financing for the first US commercial offshore wind project.

Takaki Sakai, project finance director at BTMU, says there is “considerable interest” in Cape Wind among other commercial banks active in project financing. “We expect to complete the commercial bank syndication in the near future," he says.

BTMU is coordinating lead arranger. BTMU, Natixis and Rabobank are committing in excess of $400mn, which, taken together with the previously announced $600 million loan from Danish export credit agency loan of up to EKF, totals more than $1 billion in commercial debt.

"This is one of the key steps in completing the financing package for the construction of the Cape Wind Project," says Ted Roosevelt IV, managing director at Barclays, Cape Wind's financial advisor.

Developer Energy Management Inc. (EMI) is actually seeking to finance construction of 77.5% of the project’s 468MW of nameplate capacity - the amount sold to two utilities under long-term contracts – or 101 turbines. EMI continues to look for a buyer for the balance. Massachusetts in 2011 estimated Cape Wind would cost $2.6bn for all 130 turbines.

They would be installed in shallow waters of Nantucket Sound south of Cape Cod.

Danish pension fund PensionDanmark has made a $200m investment in Cape Wind as mezzanine financing, which is debt capital that gives the lender the rights to convert to an ownership or equity interest in an asset if the loan is not paid back in time and in full.

It is usually subordinated to debt provided by banks and venture capital companies.

The US Energy Department is reviewing EMI’s request for a $500m loan guarantee. DOE in 2011 shelved a request for a loan guarantee covering the entire cost, saying the project had not sufficiently advanced.

Natixis is part of Groupe BPCE, the second largest banking group in France. It has helped finance offshore wind projects in the Netherlands and Germany. Rabobank, based in the Netherlands, has financed numerous offshore wind projects in the Netherlands, Belgium, Germany, and the UK.

"We are pleased that these experienced offshore wind lenders are supporting our efforts to diversify our region's energy mix and helping to launch the U.S. offshore wind industry," says Cape Wind President Jim Gordon.

Following financial closing, Cape Wind will commence construction activities. It expects to begin onshore cable route construction in the fourth quarter and to start ocean construction in 2015. Start of commercial operations is scheduled for late summer 2016.

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