Marubeni Acquired 40% Shares of Ever Power IPP, Gas-Fired Combined-Cycle Power Plant in Taiwan - Structuring Non-Recourse Finance by Taiwanese Lenders
Jan 25, 2008
Marubeni Corporation (hereafter “Marubeni”) has acquired 40% shares of Ever Power IPP Co., Ltd. (hereafter “Ever Power”) from Singapore Power International Pre. Ltd. (hereafter “SPI”), and China Development Industrial Bank (hereafter “CDIB”) through Axia Taiwan Holdings, Ltd., a holding company 100% owned by Marubeni.?Ever Power is located at the Haifu area in Taoyuan Hsien, Northern part of Taiwan. Ever Power is an independent power producer that sells power to Taiwan Power Company (hereafter “TPC”) under a BOO scheme with a 25-year long term power purchase agreement (“PPA”).
Total purchase price of the 40% Ever Power shares is approximately US$ 200 million (equivalent to JPY 22 billion), of which partially funded by Marubeni’s own equity and the remaining by a syndicated loan, as arranged by CDIB, Taiwan Cooperative Bank and Cathay United Bank, from selected Taiwanese lenders.
The syndicated loan is for Axia Taiwan Holdings, Ltd. as the borrower and non-recourse to Marubeni Corporation. This is probably the first acquisition finance for a multinational company in the power sector in Taiwan. The acquisition finance was initially structured as a club deal, but it attracted a substantial interest from the Taiwanese banks. Because of the profile of the project, a long term PPA with TPC and the good reputation of Marubeni in the country, thus resulted in a syndicate loan by 9 reputable Taiwanese banks.
Due to a tight electricity supply situation in Taiwan, Ministry of Economic Affairs (hereafter “MOEA”) initialed 1st round IPP bid solicitation in 1995. Marubeni together with Taiwanese partners participated in the bidding and was awarded this Ever Power project, a gas-fired combined-cycle power plant, with a total gross installed capacity of 960MW (480MW x 2 units). Ever Power achieved a successful commercial operation in 2001 and has since enjoyed a stable operation and profitability.
Marubeni divested it Ever Power interests to Taiwan companies in 2003 but had since endeavored to reinvest into Ever Power whenever opportunity arose. Recently, Marubeni learned that both SPI and CDIB had an intention to exit from Ever Power and eventually managed to entertain a direct negotiation with SPI and CDIB. Due to its familiarity in Ever Power, Marubeni was able to have a relatively speedy and smooth due diligence and negotiation process with SPI and CDIB.
Marubeni envisions its overseas IPP Investment as one of the core growing business fields and has been actively expanding global IPP asset portfolio. Marubeni currently holds a gross installed capacity of 19,483 MW and a net installed capacity (with pro-rated its ownership percentage) of 6,616 MW, as a result of this Ever Power acquisition.
IPP projects have been playing an increasing role to support TPC to provide a stable electricity supply due to rising electricity demand in Taiwan in recent years.
Marubeni will continue to develop and acquire IPP projects in Taiwan actively in order to make a greater contribution in the supply of electricity in Taiwan. Taking this acquisition opportunity, Marubeni hopes to expand its IPP business in Taiwan as one of the core markets for Marubeni in the Asia-Pacific region.
Outline of Ever Power IPP Co., Ltd.
Location: 199 Bin-Hai Road, Sec. 1, Lu-Chu Hsiang, Taoyuan Hsien, Taiwan, R.O.C.
Establishment: Jan. 30, 1996
Line of Business: Power sales to TPC under a BOO scheme for 25 years
Assets: LNG fired combined cycle power plant made by Alstom with its rated capacity at 960 MW (480 MW X 2 Blocks)
Commercial Operation: Block-1 in 2000, Block-2 in 2001
Syndicated Loan from Taiwanese Lenders
Facility Amount: NT$4.2 billion (Approx. US$130 Million)
Mandated Lead Arrangers: China Development Industrial Bank, Taiwan Cooperative Bank and Cathay United Bank
Lenders: China Development Industrial Bank, Taiwan Cooperative Bank, Cathay United Bank, Taiwan Business Bank, Land Bank of Taiwan, Agricultural Bank of Taiwan, Bank SinoPac Company Limited, Taiwan Shin Kong Commercial Bank and Taipei Fubon Commercial Bank
Facility Agent: China Development Industrial Bank