Bonds Syndicated loans Mergers and Acquisitions Equity
Project finance
Issuer: Calpine
Lead manager: CSFB
Amount: $1 billion revolving loan facility
Date: May 3 1999
Project finance has taken a bit of a hammering of late. All those wonderful trips abroad checking out deals have fallen by the wayside as emerging-market countries deal with the aftermath of the Asian and Russian financial meltdowns.
So back to domestic deals, please, and let's try to make them a bit more efficient. That, at least is what CSFB has been trying to do with a structure to enable power companies to set up revolving credit facilities for multiple power-plant development. Previously, all deals applied to one plant at a time. As deregulation of the US power industry frees up companies to compete on a national as opposed to a local basis, speed to market is crucial.
It also changes the way they make their money - local power companies were basically monopolies, selling power to the local supplier. So future cashflows were pretty well known and could be used to calculate the cost of lending the utilities money. Now the power will be sold on the open market on a competitive basis.
Calpine is hoping to be at the forefront of these developments.