 |
|
| |
|
| Deal Profiles |
 |
Plum Point Project
Missouri Joint Municipal Electric Utility Commission (MJMEUC) Power Project Revenue Bonds, Series 2006
$278,880,000
 Plum
Point is a $278.9 million
project revenue bond issued by
the Missouri Joint Municipal Electric
Utility Commission (MJMEUC) and
insured by MBIA. This award-winning
transaction will finance MJMEUC’s
acquisition of a 22% ownership
interest in Plum Point, a new
665-megawatt, base-load, coal-fired
power station located in northeastern
Arkansas. MJMEUC is a joint action
agency acting on behalf of seven
participating municipalities,
each of whom have entered into
long-term purchase power agreements
with MJMEUC to procure power from
the plant to serve their respective
power load requirements.
The transaction is comprised of
30-year bonds, modestly back-ended
post construction amortization
profile yielding a 20.5-year average
life. The security is a revenue
pledge plus security over all
reserves and other funds or assets
held by the Trustee.
Underwriting this transaction
posed a number of challenges for
MBIA. MJMEUC was not well known,
prior to this financing, had never
issued debt nor owned any generating
assets. Also, some of MJMEUC’s
participants are small unrated
municipalities, with modest economic
profiles. Furthermore, although
the developer had extensive experience
with gas-fired power projects,
it had never undertaken a coal
project, which can be impacted
by environmental and permitting
issues.
In order to gauge the transaction’s
insurability, MBIA undertook extensive
due diligence that included numerous
telephone interviews as well as
a four-day tour of the area for
face-to-face meetings with the
developer, three of the four larger
participants, MJMEUC management,
and the host city of the plant.
These visits supplemented ongoing
reviews of legal documentation
and consultant reports. Upon closer
inspection, the smaller MJMEUC
members proved to be conservatively
managed and economically resilient.
Moreover, the acquisition did
not overly leverage members, as
associated debt service merely
replaced members’ purchased power
costs. The project developer demonstrated
great depth of experience as it
has completed power generation
projects aggregating approximately
3.4 gigawatts of operating generation
capacity since 1990. Furthermore,
it currently manages 2.4 gigawatts,
encompassing investment portfolio
assets.
After a thorough review, MJMEUC
presented a compelling transaction.
By acquiring an equity stake in
the plant, MJMEUC secured relatively
low cost state-of-the-art base-load
coal-fired capacity in a region
dominated by natural gas-generated
power. Ownership in the plant
will also provide diversity to
the power resource mix in this
region and reduce the risk of
fuel price shock that many of
the municipal participants had
experienced from buying electricity
from existing regional suppliers.
In all, the MJMEUC financing is
a good example of the unique benefits
that come from public and private
entities working together.
For more information, please contact:
|
|
|
|
|
|
|
| |
| |
|
| |
|
|
|
|
|
|
|
Copyright ©2007 MBIA INC. |
|
|
