Innergex closes financing for Canada’s 21.2-MW Tretheway Creek hydro project

Innergex Renewables Energy Inc. has closed C$92.2 million (US$87.2 million) in financing for the 21.2-MW Tretheway Creek hydro project in British Columbia.

Innergex said financing is fully underwritten by National Bank Financial Inc. and Sun Life Assurance Co. of Canada, with National Bank of Canada and Sun Life Assurance as lenders. National Bank Financial is acting as agent.

The non-recourse construction and term project financing is to carry a fixed interest rate of 4.99 percent, Innergex said. Upon the start of commercial operation, the loan is to convert to a 40-year term loan, with the principal beginning to be amortized over 35 years, starting the sixth year.

The Tretheway Creek project is on Crown land 50 kilometers north of Harrison Hot Springs, B.C. Construction began in 2013, with commercial operation expected in fourth quarter 2015. The project is to generate 81,000 MWh annually, delivered to BC Hydro under a 40-year fixed-price contract obtained under British Columbia’s 2008 clean power call for proposals.

Financing proceeds are to be used to pay for the project’s construction costs as well as a loss of C$8.4 million (US$7.5 million) realized upon settlement of the bond forward contracts used to fix the interest rate on the loan prior to closing and therefore protect the project’s expected returns. The loss results from a decrease in benchmark interest rates between the date the bond forwards were entered into, in August-September 2013, and the valuation date, Sept. 30, 2014, and is compensated by lower interest payments for the duration of the loan. In addition, the project obtained a C$2.3 million letter of credit to finance the debt service reserve account for the project.

Innergex Renewable Energy signed an agreement in August with the In-SHUCK-ch Nation to develop six run-of-river hydroelectric projects totaling 150 MW in British Columbia. In June, Innergex and Desjardins Group Pension Plan acquired the 30.5-MW Sainte-Marguerite 1 hydropower plant in Quebec from the Hydromega Group.

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