Allco Finance Pockets $325M for US Wind Project Sale

Allco Finance Group and US-based consortium ArcLight Capital Partners and Terra-Gen Power have agreed to sell all its US wind energy project interests for $325 million.

The sale includes the 3100 megawatt wind energy development project based in Tehachapi, California.  It is one of the biggest wind power projects in the world.

The sale will generate significant liquidity and profitability windfall for Allco and its partners.  All these undertakings are part of a major assets sales development program of Allco.

According to Nick Bain who heads Allco’s Infrastructure, the sale will give Allco and its business partners a huge profitability and income potential.  This has been achieved for a relatively short period.  Bain added that the current sale is a result of Allco’s policy decision a couple of years ago to establish itself as a major international wind power producer.

Allco and Oak Creek Energy

On the other hand, Allco’s Wind Energy top honcho, Steen Stavnsbo said that they benefited significantly from their relationship with the Tehachapi development partner Oak Creek Energy Systems.

Oak Creek is a subsidiary of Marubeni Corporation that has trail blazed the development of the wind project until today.

The after tax sale profit of Allco, which is expected to reach $165 million, will be used to pay its debt with its banking partners.  The sale also released Allco from a letter of credit amounting to $65 million.  

The overall debt and obligations responsibilities of Allco are expected to be reduced by A$230 million because of the sale.

The present borrowings and financial commitments of Allco is A$935 million based on its current senior debt facilities.  Allco seeks to achieve a debt level of A$675 million at the end of July 2008, through the sale of the Tehachapi project and its other assets.

By the end of July, it is expected that all regulatory requirements for the sale will be satisfied.

The wind energy project in Tehachapi is the biggest power project in the United States controlled by a single entity.  It has been supported by a 1550 megawatt power agreement with Southern California Edison.  The landmark agreement was announced by Allco in December 2006.

Tehachapi is ideally located in California’s wind zone.  The State targets to achieve a 20% renewable energy requirement by 2010.  By 2020, California seeks to increase their renewable energy resource to 33%.  

Allco was assisted in the sale by the leading US financial advisor Marathon Capital, LLC.  Its head legal counsel was Kaye Scholer.