Two-Pronged Sale Process for Power Plant Project

With the Sponsor in default on the PPA, which allowed CFE to legally terminate the contract at any time, Carl Marks Advisors’ immediate task was to demonstrate an expedited path to returning the Project to commercial viability.  Our team quickly developed a consensus building plan that the Sponsor, CFE, and Bridge Lenders supported.

After evaluating the situation, it was determined that a sale of the Project would maximize value and, within two weeks of being engaged, CMA had prepared marketing materials, coordinated, and launched a comprehensive marketing process.  CMA targeted a variety of international strategic and financial buyers that had the ability to acquire the Project on an expedited basis.  Catering to the unique needs of the constituents involved, Carl Marks Advisors created a dual-path sale process that provided clarity to the marketplace and maximized interest and value. The team executed on an aggressive timeline that included numerous key milestones and deliverables to mitigate PPA termination risk and build credibility and confidence with CFE.

Carl Marks Advisors developed and negotiated several transaction frameworks that allowed new investors to either partner with the Sponsor or take over the Project completely.  Presenting multiple transaction structures to the buyer universe created flexibility and allowed a variety of buyers with different goals to participate.  Carl Marks Advisors was able to create a competitive auction dynamic utilizing multiple bid deadlines and transaction structures to increase value for our client.  After a fulsome marketing process a variety of proposals were received.

Carl Marks Advisors evaluated all bids submitted and after consultation with CFE, the Sponsor and the Bridge Lenders determined that a joint bid from Macquarie Group (“Macquarie”) and Techint Engineering and Construction (“Techint”) (together the “Consortium”) would provide the greatest value and best path for Norte III to reach commercial operation in a timely manner.   As part of the transaction, Techint took over as the engineering, procurement, and construction contractor but will continue to work with the Sponsor to finalize construction of the Project. In connection with the acquisition of the Project, the Consortium was able to secure new financing from ten different financial institutions. The Bridge Lenders were able to restructure their existing loan while continue to support Norte III by participating in the new financing.

• Building consensus among all parties is sometimes the most difficult, yet most valuable aspect of successfully completing a complex engagement. Striving to align the interests of the Bridge Lenders, the Sponsor, CFE, and a new investor required flexibility, creative thinking, and industry expertise.
• Creatively structuring the sale process to maximize potential interest and finding the right buyer was critical. A financial advisor must be knowledgeable not only of who the key players in the market are but also what their strategic goals and capabilities are to ensure value is maximized and milestones can be met.
• In any complex engagement that unfolds over an extended period of time with multiple parties and divergent interests, a successful outcome requires resilience, perseverance and a crystal clear focus on the ultimate goal of the client throughout the process.