Pattern secures financing for Chilean solar project

The Riverstone-backed renewable energy developer has reached financial close on the $205m Conejo Solar project, Pattern Development’s first solar energy investment.

Pattern Development, a company backed by private equity firm Riverstone Holdings, has secured $205 million in financing for the Conejo Solar project, a 122-megawatt (MW) solar plant, the company is building in Chile.

Crédit Agricole, Société Générale and Sumitomo Mitsui provided a construction and term loan facility and related letters of credit, Milbank, Tweed, Hadley & McCloy, the law firm representing the lenders, said in a statement. Milbank also served as US counsel to Banco Santander-Chile, which provided a separate loan facility to finance value-added tax payments by Conejo Solar.

The Conejo facility, which will be built on public lands owned by the Chilean government in the Atacama Desert – the driest non-polar desert in the world – will benefit from a 22-year power purchase agreement (PPA) with Minera Los Pelambres, a copper and molybdenum (a mineral used in the production of steel alloys) mine affiliated with Antofagasta Minerals. Minera Los Pelambres will offtake approximately 65 percent of power output throughout the agreement term. The project, expected to begin commercial operation in 2016, will also connect to the Chilean power grid, or Sistema Interconectado Central (SIC) transmission system.

The new solar plant will help Chile generate at least one-fifth of its energy from non-conventional renewable sources by 2025, a goal the country is set to meet ahead of schedule, according to Allan Marks, the Milbank project finance partner who lead the deal team.

“We are expanding into the solar power market with one of the largest solar projects in Latin America,” said Pattern Development president and chief executive Mike Garland in a related release. “Conejo Solar was originated by Pattern Development, demonstrating that solar power is an excellent fit with our wind business that allows us to leverage our extensive development expertise.”

Pattern Development’s portfolio currently comprises 16 wind farms, 14 of which are already in operation, including El Arrayan, the largest wind facility in Chile.

While Pattern Development’s yieldco, Pattern Energy, added the Conejo Solar project to its Right of First Offer (ROFO) list last September, it has not yet acquired it. According to a company spokesperson acquisition is usually triggered upon completion of the project.

Pattern Energy initially listed in September 2013, raising net proceeds of $319 million. Although it is a yieldco, it is designed to become a fully-fledged project developer – and not just an owner of operational assets, as most yieldcos are – once its market capitalisation hits $2.5 billion, according to a report from law firm Chadbourne & Parke.

When that happens, the yieldco will inherit the workforce of its parent company. It also has an option to buy its parent company should its current owners decide to sell a significant portion of its equity or assets.

New York-based Riverstone invested in Pattern Development in June 2009 but has not disclosed the ownership interest it holds in the company.

Since being established in 2000, the private equity firm, which focuses on the power and energy sectors, has raised more than $28 billion of equity capital and committed approximately $28 billion to 114 investments in North America, Latin America, Europe, Africa and Asia.

The firm conducts buyout and growth capital investments in the exploration and production, midstream, oilfield services, power and renewables sectors.

Additional reporting by Kalliope Gourntis.