Shenyang Power Group Co. Ltd. (SPG), an industrial construction company in which A-Power Energy Generation Systems Ltd. owns a 19.5% interest, has signed a letter of intent (LOI) with China Machinery Engineering Corp. (CMEC) involving the development of a proposed 615 MW wind project in Texas.
The goal of this planned arrangement is to assist SPG in securing from Chinese sources approximately 14% of the debt financing that is expected to be required in order to develop the project, as well as to find a suitable engineering, procurement and construction (EPC) contractor for the wind farm.
The LOI calls for SPG to appoint CMEC as the EPC contractor for the project and for CMEC to assist SPG in obtaining approximately $260 million in debt financing from banks and other financing agencies in China for Spinning Star Energy LLC, the project company that was founded to own, develop and operate the Texas project. As the EPC contractor, CMEC would be expected to procure equipment from suppliers designated by SPG.
The parties expect to have further discussions and negotiations regarding the details of the arrangements covered by the LOI and to prepare and finalize the multiple agreements that will be required to create binding obligations between the parties during the course of this month.