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Bingham Projects Team Powers Major Deals

$1.5B Astoria Deal Is Largest in 2009; Underscores Practice’s High-Profile Capabilities

July 14, 2009 — Although the financial crisis has stalled many energy, industrial and infrastructure projects, Bingham’s Projects Group recently closed on a deal involving a New York City electric generation facility valued at more than $1.5 billion in debt and equity transactions, making it the largest energy-project transaction to close this year.

A team of Bingham lawyers represented Astoria Energy II and Astoria Project Partners II, collectively known as Astoria, in the construction and long-term financing of a 550-megawatt natural gas-fired combined cycle electric generation project in Queens. Astoria will sell its energy and capacity to the New York Power Authority under a 20-year tolling agreement.

“The transaction involved several innovative features, including an exemption from the New York mortgage recording tax, a senior lien in favor of the offtaker, the New York Power Authority, that is pari passu with the senior lenders, and a complex common facilities arrangement addressing shared permits and common facilities,” said Marc Reardon, co-leader of Bingham’s Projects Group and the lead partner on the Astoria deal.

The transaction was complex, with the bank financing of approximately $1.08 billion involving a syndicate of 13 international financial institutions. The equity sponsors committed more than $480 million in base and contingent equity.

Astoria and Bingham had been involved in the development of the project for several years prior to closing, and the recent closing was a major milestone in the second phase of building the overall Astoria facility, which will be a 1,000-megawatt generation plant. The first phase of the project, which closed in 2004, was a 500-megawatt gas-fired plant that involved $725 million in long-term financing and more than $100 million in letters of credit.

Joining Reardon on the Astoria deal were Boston partners Stephen MiklusVincent SacchettiRobert McDonnellDon Abrams and James Black; Boston of counsel Kathleen Phelps; Boston counsel William Squires; and Boston associates Michael Muller, Dinesh Melwani and Kathryn Thomas. 

The Astoria deal was one in a long line of transactions that Bingham’s Projects Group has handled. The practice has extensive experience in all aspects of the development, financing, construction, operation, acquisition, disposition and restructuring of domestic and international energy, industrial and infrastructure projects.

The Projects Group has received accolades for its work on five Project Finance magazine Deals of the Year since 2005 for the innovative project finance transactions Kleen Energy Systems, the Noble I and Noble II wind projects, Calypso, and Astoria Energy. The group also has received recognition from other industry publications for its work, including other deals of the year awards.

“To have five projects in four years awarded deal of the year by Project Finance magazine is unique,” Reardon said. “We’re working on matters that are top-of-the-market deals.”

That experience in top-of-the-market deals has positioned the group well to handle energy and infrastructure issues that may arise due to President Obama’s stimulus plan.

But help may be on the way. The 2009 economic stimulus package has added nearly $60 billion to the Department of Energy’s loan guarantee program, which provides funding for renewable energy and electric power transmission projects.

Bingham’s Projects Group has been involved in much of that activity. The practice has handled the development, siting, permitting, construction, financing, operation, regulation, acquisition, divestiture and restructuring of wind power, solar power, biofuel, geothermal, and other renewable and cleantech projects in the United States and abroad, in addition to natural gas-fired and other non-renewable projects.

In the wind energy sector, Projects Group lawyers have closed transactions totaling more than 2,630 megawatts representing developers, lenders and tax-equity providers, and are currently involved in the development and financing of multiple projects.

The group also has handled work in solar power and biofuels, as well as more innovative sources of energy such as geothermal power production. Lawyers have worked on deals to build facilities that convert methane gas from landfills into electricity and plants that convert agricultural and municipal solid waste into energy.

In addition, depending on a project’s location on the electrical grid, interconnection costs, and markets for power offtake, contracts can exhibit large variations. Even within a single electrical region, power prices can vary by factors of more than 100 percent. And most electric generation market entry and sales are still strictly regulated, she noted.

But regardless of how the future of energy production and distribution evolves, Bingham’s Projects Group has displayed that it is able to handle deals of many sizes, as the Astoria transaction showed.

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