Leveraging its Expertise, Milbank Successfully Closed the $475 Million Refinancing of KGen LLC’s Senior Credit Facility
LOS ANGELES, CA and WASHINGTON, DC, March 24, 2005 – Leveraging its expertise in project finance and power & energy, the international law firm Milbank, Tweed, Hadley & McCloy LLP, led by partners Ed Feo and Jonathan Maizel, successfully closed the $475 million refinancing of KGen LLC’s senior credit facility that was originally provided to KGen for its acquisition of three combined-cycle and five simple-cycle gas powered facilities from Duke Energy North America. The transaction presented unique challenges given a tight transaction timetable and dealing with a number of counterparties and Duke Energy as the holder of seller financing.
Milbank’s Jonathan Maizel stated, “KGen benefited not only from Credit Suisse First Boston’s experience and leadership in the successful structuring and syndication of the facility, but also from KGen’s strong relationships with its key commercial counterparties, including Duke Energy, whose cooperation was essential for the refinancing.”
About the Refinancing:
A portion of the proceeds from the $475 million facility was used by KGen to repay the seller financing initially provided by Duke Energy. The increase in the size of the facility from $325 million to $475 million, together with the improved financial terms provided to KGen, is indicative not only of the continued improvement in the markets generally, but also of the increased confidence in the energy strategy being executed by KGen and Matlin Patterson, KGen’s financial sponsor. Credit Suisse First Boston acted as arranger of the financing.
Milbank also represented KGen LLC in its original purchase of the merchant power plants from Duke Energy in August 2004. The facilities, located in the southeastern U.S. states of Arkansas, Georgia, Kentucky and Mississippi, have an aggregate 5,325 MW of nominal generating capacity.
The Milbank team representing KGen LLC was led by partners Ed Feo (co-chair of Milbank’s Global Project Finance Group and a member of the firm’s Executive Committee) and Jonathan Maizel and included associates Nick DeCarlo and Alex Choinski.
Milbank’s Global Project Finance Department is one of the largest and most experienced among the world’s major law firms. Renowned for its leadership, Milbank has pioneered some of the most innovative project financing techniques, and consistently ranks among the top law international law firms by industry trade publications such as Infrastructure Journal, Privatisation International, Project Finance International, The American Lawyer and Euromoney’s Project Finance Book of Lists. With more than 100 dedicated project finance attorneys in the firm’s offices worldwide, Milbank provides legal advice under both U.S. and English law. As the project finance marketplace has evolved, Milbank’s Global Project Finance attorneys have expanded the range of products and services by working in conjunction with attorneys from other practice areas to encompass restructuring, mergers & acquisitions, development and finance and regulation.
In 2004 Milbank closed $21 billion of deals, a record eight of which were named Euromoney’s Project Finance magazine’s “DEALS OF THE YEAR” and consistent with its global leadership, Milbank has also been named “INTERNATIONAL FIRM OF THE YEAR” by Legal Week, a leading legal industry publication. These award-winning deals are:
- Brascan Hydro (U.S.): The non-recourse $500 million bridge financing to fund Brascan’s $874 million acquisition of power generating stations from Reliant Energy came to market without a single contract or parent guarantee.
- PearlOil Holdings (Indonesia/Thailand): $35 million borrowing base production loan. The aggregation of the oil and gas fields in Indonesia and Thailand into a single borrowing base structure is the first of its kind in Asia.
- Chicago Skyway Privatization (U.S.): The $1.82 billion, 99 year agreement in which the Cintra-Macquarie consortium successfully acquired the concession to “toll” and operate the 8 mile elevated Chicago Skyway toll road is a landmark transaction in the United States, where this type of public-private partnership is relatively novel (although common in Europe and elsewhere.)
- El Cajon Hydro project (Mexico): The $735 million project financing was the largest deal in Mexico in 2004 and among the largest IPPs ever project financed in Latin America. El Cajon was also named Project Finance International’s “LATIN AMERICAN DEAL OF THE YEAR”.
- Veladero Mining project (Argentina): The $250 million mine financing was the first project financing in Argentina since the economic crisis, the first ECA transaction in Argentina since the crisis, and the first political risk insurance program for Argentina since the crisis. Veladero was also named Project Finance International’s “MINING DEAL OF THE YEAR”.
- Three Winds Holdings wind project (U.S.): Landmark $123 million project financing for 152 MW of wind farms developed by Shell Wind Energy.
- Sohar Independent Water & Power Project (IWPP) (Oman): $544 million syndicated project financing in Oman.
- MOMA Titanium Project (Mozambique): The $400 million financing was the largest African mine project completed in Africa in 2004, and sets a benchmark for an African investment by a relatively small-cap project company operating in an untried market.
- Nigeria NGL II Financing: $1.2 billion expansion financing of certain offshore Nigeria natural gas liquids extraction and processing facilities jointly owned by Mobil Producing Nigeria and the Nigerian National Petroleum Corporation. Milbank represented the Overseas Private Investment Corporation (OPIC) and a syndicate of senior lenders in a transaction notable for being the first forward sale done in Nigeria.
Milbank, Tweed, Hadley & McCloy LLP is a premier global law firm headquartered in New York, with offices in Washington, DC, Los Angeles, Palo Alto, London, Frankfurt, Munich, Tokyo, Hong Kong and Singapore. Recently named “INTERNATIONAL LAW FIRM OF THE YEAR” by Legal Week, Milbank is a recognized leader in capital markets, corporate finance, project finance, acquisition finance, and other major fields of legal practice. The Firm's practice includes cross-border mergers and acquisitions and global securities transactions as well as assisting multinational clients with their cross border investments. Milbank 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.