November 18, 2015

Milbank Advises Lender Syndicate in $1.1 Billion Gas Pipeline Projects

Share
Pair of pipelines to carry natural gas from southwest Texas hub to US/Mexico border facilities

Milbank, Tweed, Hadley & McCloy LLP has advised an international bank syndicate in the more than $1.1 billion limited recourse project financing for a pair of natural gas pipelines that will run from a hub in southwest Texas to locations on the US/Mexico border.

The financing comprises two greenfield projects through two separate financings that have closed and funded concurrently: an approximately $508 million pipeline running 195 miles to San Elizario, Texas, near El Paso; and an approximately $647 million pipeline that will run 148 miles to Presidio, Texas, on the Rio Grande River about 180 miles southeast of San Elizario. The 42-inch pipelines will both originate at the Waha energy storage and transit hub west of Odessa, Texas.

The borrower/developer is a consortium consisting of Mexico’s Carso Energy SA de CV, Energy Transfer Partners LP of Texas, and MasTec Inc. of Florida, and gas will be sold via offtake agreements with the Mexican state-owned electric utility, Comisión Federal de Electricidad (CFE).

Global Project Finance partners Dan Bartfeld and Daniel Michalchuk led the Milbank team on behalf of the lenders, including The Bank of Tokyo Mitsubishi / MUFG, Sumitomo Mitsui Banking Corp. (SMBC), BBVA Bancomer and Mizuho Bank Ltd.

Mr. Michalchuk said, “US natural gas supplies make it a natural provider for Mexico’s electrical utility, which needs reliable sources to fuel its growth. Milbank is happy to play a role in helping facilitate financing for projects that are mutually beneficial to neighbors on either side of the Rio Grande.”

Mr. Bartfeld added “We are very pleased to work again on a major energy financing that highlights the growth in the US and Mexican energy sectors. We are involved in many of these pipeline and gas-related projects on both sides of the border, and we expect to see many more in the coming years.”

Mr. Bartfeld and Mr. Michalchuk were assisted in the transaction by Global Project Finance associates Caroline Conway, Sean O’Neill and Carolyn Miller.

About Milbank

Milbank, Tweed, Hadley & McCloy LLP is a leading international law firm that has been providing innovative legal solutions to clients throughout the world for nearly 150 years. Milbank is headquartered in New York and has offices in Beijing, Frankfurt, Hong Kong, London, Los Angeles, Munich, São Paulo, Seoul, Singapore, Tokyo and Washington, DC.

The firm’s lawyers provide a full range of legal services to the world’s leading commercial, financial and industrial enterprises, as well as to institutions, individuals and governments. Milbank’s lawyers meet the needs of its clients by offering a highly integrated and collaborative range of services across key practice groups throughout its global network. Milbank’s integrated practice is underpinned by its attorneys’ acknowledged technical excellence, sectorial experience and a strong tradition of innovation and client service.