US Solar makes fifth purchase – US Solar Fund has signed binding agreements for its fifth purchase. The is buying cash equity interests in an approximately 61MWDC portfolio of four mechanically-complete utility-scale solar power projects located in Oregon. The deal should complete in the near future, simultaneous with financial close of tax equity financing and a binding loan commitment from the long-term debt provider.
The projects are being bought from Southern Current LLC, a leading US solar developer and EPC contractor. All four projects in the Portfolio will sell 100% of their electricity output under long-term power purchase agreements (PPAs) with Portland General Electric, which has an S&P credit rating of BBB+. Portland is an Oregon-based utility servicing 1.9 million customers in and around the city of Portland. The PPAs set escalating prices with fixed annual percentage increases for a weighted average term of 11.2 years.
While the four projects are mechanically complete, plant commissioning is subject to the interconnection utility re-starting work following COVID-19 restrictions, expected to occur in the near future. The full purchase price will not be handed over until the utility completes the work and the plants are operational and selling power under the PPAs. Additionally, the purchase price is subject to downward adjustment dependent on the length of time until the plants are operational.
USF will fund its acquisition with approximately US$23 million of cash on hand and US$43 million in long-term bank debt. Following the acquisition, and consistent with previous announcements, USF intends to use the approximately 15% of IPO proceeds remaining for further acquisitions or to partially pay down the existing project-level debt associated with its last deal (with any such a paydown being at USF’s option). USF might raise equity to fund the debt paydown.
The expected returns are in line with the prospectus dated 26 February 2019.
USF : US Solar makes fifth purchase