Innergex closes financing for Big Silver Creek hydroelectric project

Innergex Renewable Energy has announced the closing of a CA$197.2 million (US$159.7 million) non-recourse construction and term project financing for the 40.6 MW Big Silver Creek hydroelectric project in British Columbia, Canada.

The financing was arranged by the Manufacturers Life Insurance Company (Manulife) as agent and lead lender, along with the Caisse de Dépôt et Placement du Québec (CDPQ) as a second lender. It comprises three facilities:

• A CA$51 million (US$41.3 million) construction loan with fixed interest rate of 4.56%; following the start of the facility's commercial operation, it will convert into a 25-year term loan and the principal will be amortized over an 18-year period, starting in the seventh year;

• A CA$128.3 million (US$103.9 million) construction loan with fixed interest rate of 4.76%; following the start of commercial operation, it will convert into a 40-year term loan and the principal will begin to be amortized after the 25-year term loan's maturity;

• A CA$17.9 million (US$14.5 million) construction loan carrying a fixed interest rate of 4.76%; following the start of the facility's commercial operation, it will convert into a 40-year term loan and its principal will be reimbursed at maturity.

Proceeds of the financing will be used to pay for the project's construction costs, as well as a loss of approximately CA$24.7 million (US$20 million) realized upon settlement of the bond forward contracts used to fix the benchmark interest rate for the loans prior to closing and therefore protect the project's expected return. This loss results from a decrease in benchmark interest rates between the date the bond forwards were entered into and the valuation date. It is compensated by lower interest payments for the duration of the loans.

The Big Silver Creek project is a run-of-river hydroelectric power facility with a generating capacity of 40.6 MW and an estimated yearly output of 139.8 GWh. Located roughly 40 km north of Harrison Hot Springs, British Columbia, construction of the site began in 2014 and commercial operation is expected to commence in late 2016.

BC Hydro will buy the electricity generated by the plant under a 40-year Power Purchase Agreement (PPA).

Michel Letellier, President and CEO of Innergex, has commented:

"We are very happy to have succeeded, together with our lenders, in optimizing the terms for this debt and the cash flows that will be generated by the facility over the life of the power purchase agreement. Construction is progressing well, especially with the recent completion of the tunnel, and the project remains on time and on budget."

Innergex develops, owns and operates run-of-river hydroelectric facilities, wind farms and solar photovoltaic sites in Quebec, Ontario and British Columbia as well as in Idaho (USA). The company's asset portfolio currently consists of interests in 33 operating facilities with a total of 1,194 MW gross capacity and more than 3 GW of capacity in its pipeline.