Tonbridge Power Inc., through its wholly owned subsidiary as borrower, Montana Alberta Tie Ltd. (MATL), has entered into a letter of intent with its customer, NaturEner USA LLC, whereby NaturEner will prepay approximately $35 million of revenues from years 11 to 25 of its transmission rights agreement.
MATL has entered into a number of transmission rights agreements, including with NaturEner, regarding transmission capacity that will be made available through the construction and operation of an approximately 214 mile, 230 kV AC transmission line between Lethbridge, Alberta and Great Falls, Mont., and contemporaneous upgrading of the related Great Falls substation. The prepayment will be applied to construction costs relating to the project. The completion of the proposed prepayment will represent a significant component of the financing necessary for construction of the project to proceed.
The terms of the prepayment will be finalized in definitive agreements and are expected to include security interests in favor of NaturEner, which will be subordinate to senior credit facilities entered into by Tonbridge. Drawings on the prepayment will be made rateably with and proportionate to any advances on senior credit facilities that are arranged in conjunction with the project. Availability of the prepayment will be subject to conditions precedent.
The letter of intent also calls for NaturEner to arrange with an investment-grade counterparty to provide 10 years of investment-grade credit support for its payment obligations.
SOURCE: Tonbridge Power Inc.