re : update i am comfortable with the allegheny credit - my understanding is that they are getting a sweetheart deal on the assets being transferred from their regulated utility so they will be in a buying mode for quite some time - in fact they are a good candidate for buying this but i did not want to disrupt the negotiations by bringing up the equity sale .
regarding turbopark , this project on its own could go into turbopark ( we are using their form of epc ) , but because this is linked to a fair market value qf , accounting is not comfortable using it ( it risks our favourable arthur anderson treatment on all of our fmv assets ) we have assumed in our economics that the bridge loan is priced at 15 % .
the allegheny toll , and all development contracts are a cp to this deal - this needs to be perfectly nailed down prior to pulling the trigger !
louise kitchen
04 / 12 / 2001 12 : 59 pm
to : christopher f calger / pdx / ect @ ect
cc :
subject : re : update
have a good time ski - ing .
if you catch this before you go - are we happy with the allegheny credit ? i take it that you just don ' t meet the terms of turbopark - what is the cost of the bridge loan ? i assume allengheny toll is a cp on going forward with this deal .
louise
christopher f calger
04 / 12 / 2001 01 : 57 pm
to : louise kitchen / hou / ect @ ect
cc :
subject : update
turbine swap : we are providing the final definitive agreement to delta today . we have received and incorporated their comments . based on this , they are supposed to fund on april 20 . the lawyers are planning to meet early next week to review any final / new comments and closing process . i am talking with dean vanech on a different matter so i will nudge him along as well .
i am out tomorrow - skiing
las vegas : the development of the expansion is being pulled together and the tolling agreement with allegheny is nearly complete . we expect everything to be done later this month . we would like approval to construct this project subject to everything being fialized . as such , we are hoping to review this with you and john monday , execute a dash later in the week and seek executive committee / board approval on april 30 / may 1 for up to $ 200 mm . we will have a detailed presentation / dash for your review monday ( rac , finance , accounting and legal have seen the dash and are aware of timing ) . in general . . .
- location : north las vegas , adjacent to existing lm 6000 qf facility
- description : $ 195 mm , 225 mw combined cycle lm 6000 , 7 , 800 heat rate , cod of september 1 , 2002
- interconnect : nevada power
- gas supply : southwest power
- permits : done
- epc contractor : modern continental with fixed price turnkey with a - rated bonding ( a second tier , but financeable contract )
- tolling terms : 15 year , allegheny delivers fuel to plant , and takes power from plant , $ 12 . 15 / kwmonth plus variable charges = $ 29 mm / year
- returns are > 15 % when we believe the asset market needs 10 % - 12 %
- based on fountain valley comparables ( discount rates and terminal value assumptions ) i think we can make $ 25 mm - $ 30 mm selling this project this year .
- interested bidders include black hills , northland power , transcanada , delta power , calpine
- turbopark can not be used so joe and i have agreed to a 120 day bridge loan from enron until project financing can be secured
wind : my wind guys are talking with ene wind . they are concerned that ene wind may sell to a bpa rfp at a price below epmi ' s bid . they also want to option a couple of ene wind ' s sites in order to quickly capture opportunities - in general we believe that ene wind has some good sites , but does not have the resources to get them done , so we would like to control the site and bring together companies that want to partner with us ( equity - cinergy , epc / o & m - enexco ) . we believe that we can pull a deal together that could result in ene wind selling more turbines and ena generating strong marketing premiums without either one of us putting any significant capital at risk . mark metz suggested that anything that can help ene wid sell more turbines is a good thing . i will talk with him and adam umanoff .
