Two-Pronged Sale Process for Power Plant Project

norte-3

Situation Overview

Norte III consists of the design, procurement, construction, operation, and maintenance of a 907MW combined-cycle gas-fired turbine power plant located near Ciudad Juarez, Mexico (the “Project”).  The Project was awarded by the Comisión Federal de Electricidad (“CFE”) to Abeinsa Juarez N-III, S.A. de C.V. (the “Sponsor”), a Mexican subsidiary of Abengoa S.A. (“Abengoa”), with a 25 year power purchase agreement (“PPA”) in 2015.

The Sponsor sourced interim financing from a group of lenders (“Bridge Lenders”) to provide the initial financing of certain project costs (the “Bridge Loan”) while structuring and negotiating the terms of the permanent long-term project financing.  Shortly after commencing construction, Abengoa’s financial performance deteriorated and it ultimately initiated an insolvency process in Spain.  As a result of Abengoa’s liquidity constraints, the Sponsor defaulted on both the Bridge Loan and PPA and construction temporarily halted.  Minimal work on the Project had been completed, and without additional sources of capital and support from CFE the Project’s commercial viability was being questioned and the PPA could be terminated.

With the Norte III project suspended and no solution on how to complete the Project in place, the Bridge Lenders retained Carl Marks Advisors (“CMA) to evaluate the Project’s strategic alternatives including a restructuring or potential sale of Norte III.

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