Korean firms underwrite $298 mn debt on new US gas plant

  • 2019-05-10

Three South Korean financial services firms – NH Investment & Securities Co. Ltd., its affiliate NH Bank and Hana Financial Investment Co. Ltd. – have underwritten senior debts of $298 million for a $1.05 billion gas-fired plant project in Michigan, in which two domestic energy companies participated as key equity investors.

The financing for Indeck Niles Energy Center would help kickstart the construction of the 1,085 MW plant which had been delayed due to financing issues since announced in 2016.

NH Investment, NH Bank and Hana Financial joined the syndicated loan group which provided a total of $590 million in senior notes for the $1.05 billion project, NH Bank said in a statement on May 8.

The syndicated group includes Nomura Securities Co., Credit Agricole and BNP Paribas.

They signed an agreement on the senior debt financing in New York on May 7.

Specifically, NH Bank provided $148 million in a floating rate loan, while NH Investment and Hana Financial extended $75 million each in a fixed rate note, according to sources with knowledge of the matter.

Both NH Investment and Hana Financial plan to sell them down through NH-Amundi Asset Management Co. Ltd. NH Bank has yet to decide on the resale.

They declined to disclose expected yields from the debt.

EQUITY TRANCHE

For the equity tranche which is estimated at $460 million, state-run Korea Southern Power Co. and Daelim Energy Co. Ltd. – decided in February to take an equity interest of 50% and 30% each in the power plant, according to local media reports.

Indeck Energy holds the remaining 20% stake in the project.

The investment marked the first foray into the US gas power market by a South Korean energy company which has been diversifying beyond coal-fired generation.

Korea Southern Power, as the largest shareholder, played a leading role in arranging the debt underwriting.

After starting operations in March 2022 as scheduled, the plant will supply electricity to the Pennsylvania, New Jersey and Maryland (PJM) energy market, the largest power market in the US.

In 2017, Hana Financial and NH Bank underwrote an aggregate $400 million of debt to finance the construction of the Panda Mattawoman Power Project, a $1.16 billion gas power plant in Maryland.

In 2018, NH Investment acted as a lead underwriter of the financing package for the 1,100 MW South Field Electric Generating Facility, a natural gas-fired power plant in Ohio, underwriting a $200 million senior debt and a $35 million equity interest.

By Hyunil Lee

hiuneal@hankyung.com

<Edited by Yeonhee Kim>