Press Release
Milbank Represents JBIC and Commercial Bank Lenders in Landmark Financing for Acquisition of CBK Power Project in the Phillipines
Japan’s Export Credit Agency Provides Limited Recourse Financing In First of Its Kind Transaction
TOKYO, JAPAN, April 19, 2005 - In a landmark transaction, a Japanese consortium comprising Electric Power Development Co., Ltd. (“J-Power”) and Sumitomo Corporation (“Sumitomo”) has signed financing documentation with Japan Bank for International Cooperation (“JBIC”), Mizuho Corporate Bank, Ltd. and ING Bank, N.V., making available an aggregate $100 million in limited recourse loans for the financing of the consortium’s acquisition of the CBK Power Project in the Philippines.
The international law firm Milbank, Tweed, Hadley & McCloy LLP represented JBIC, the commercial bank lenders and the agents. The Milbank team was led by Tokyo office managing partner Gary Wigmore and lead associate James Murray. The core deal team for the financing also included associates Ken Hawkes, Melissa Lewis and Perry Hicks.
Gary Wigmore, head of Milbank’s Asian project finance practice, commented. “This transaction represents a major milestone for JBIC, being the first time this governmental institution (or, as far as we are aware, any other export credit agency globally) has provided limited recourse financing for an acquisition of a project. This new JBIC product is expected to be extremely popular among Japanese trading companies and utilities looking to make offshore acquisitions, and has the potential to provide a competitive advantage for Japanese participants in auction-style sale processes.”
Milbank project finance lawyer James Murray noted, “Milbank’s role representing JBIC in the development of a “first-of-its-kind” ECA financing product represents a continuation of a number of recent successes for Milbank’s Japan practice group, and is a positive endorsement of the firm’s commitment to our Tokyo-based operations. Our Tokyo team hopes to take a leading role in this kind of work as Japanese investment abroad continues to expand.”
About the Financing:
The acquisition financing for the CBK power project comprises an aggregate of $100 million in available loans, held 60% by JBIC and 40% by commercial banks. The loans are expected to be drawn in two stages: the first to finance the acquisition of Edison Mission Energy’s interests in the project (completed late last year) and the second to finance the acquisition of the project interests of an Argentinean company, Industrias Metalurgicas Pescarmona S.A. (“IMPSA”).
About the Project:
The CBK power project is a 792 MW pump storage hydro facility originally sponsored by IMPSA and Edison Mission Energy. The project benefits from a long term power off-take contract with government-owned power utility, National Power Corporation (“NPC”), and recently achieved completion for all nine units of the facility. The project has existing senior project finance debt (separate from the acquisition financing) in excess of $300 million.
Milbank’s involvement with the project extends back to 1998, with the firm representing the senior lenders at the time of the original project financing and more recently in the representation of bridge lenders to IMPSA prior to the sale to J-Power and Sumitomo.
About the Sponsors:
J-Power is a major Japanese power utility with a significant portfolio of investments in off-shore Independent Power Projects (“IPPs”). J-Power is partly owned by the Japanese government and a number of government-owned power utilities, with the balance of its shares made subject to a recent Initial Public Offering. J-Power is expected to continue with its program of targeted off-shore acquisitions in the power sector over at least the medium term.
Sumitomo is a major Japanese trading company (sogo shosha) with investments across the globe and in a broad range of industry sectors. Sumitomo imports and exports metals, machinery, electronics, fuels, chemicals, textiles, and food products. It also is active in finance, logistics, and real estate. The company's top revenue producers are its consumer goods unit, which handles food and textiles, and its transportation and construction equipment business.
About Milbank:
With offices in Asia for more than 25 years, Milbank has one of the deepest and broadest practices among U.S. firms in Asia, encompassing project finance, capital markets, M&A and acquisition finance, restructuring, structured products transactions, leasing and transportation finance. Milbank currently has approximately 35 attorneys resident in its Hong Kong, Singapore and Tokyo offices, with attorneys qualified to practice New York and English law.
Milbank continues to be at the forefront of some of the most notable deals in Asia, including the largest corporate debt offering ever, the largest restructuring ever, and two of the largest private equity deals. Milbank has played an active role in landmark transactions spanning virtually every Asian country and across diverse industries.
Milbank, Tweed, Hadley & McCloy LLP is a premier global law firm headquartered in New York, with offices in Washington, D.C., Los Angeles, Palo Alto, London, Frankfurt, Munich, Tokyo, Hong Kong and Singapore. Milbank is a recognized leader in mergers and acquisitions, capital markets and corporate finance, project finance, acquisition finance, restructuring, and other major fields of legal practice. Milbank provides both English and U.S. law capabilities to its clientele, and provides a full range of services to many of the world’s leading financial, industrial and commercial enterprises, as well as governments, institutions and individuals.