Summary
NextEra Energy Inc. (NEE) announced through its indirect wholly-owned subsidiary, Heartland Wind II, LLC, the execution of a significant financing agreement on May 18, 2009. This $343 million limited-recourse senior secured variable rate term loan will fund the development and construction of 298.5 megawatts of wind generation facilities and associated transmission infrastructure in North Dakota and Iowa. The loan, set to mature in May 2017, features quarterly interest payments and partial principal amortization, with a balloon payment at maturity. The structure is designed to be non-recourse to the parent company beyond the pledged assets.
Key Highlights
- 1Heartland Wind II, LLC, an indirect subsidiary of NextEra Energy Resources, secured a $343 million term loan.
- 2The loan is limited-recourse and senior secured, indicating a specific pool of assets backing the debt.
- 3Proceeds will fund the development and construction of 298.5 MW of wind generation and transmission facilities.
- 4The project is located in North Dakota and Iowa, diversifying NextEra's renewable energy footprint.
- 5The loan has a maturity date of May 2017, with partial amortization and a balloon payment.
- 6Interest is payable quarterly on the variable rate loan.
- 7The loan agreement includes standard default and covenant provisions.
Frequently Asked Questions
The loan proceeds are intended to reimburse, in part, capital contributions made by NextEra Energy Resources for the development and construction of wind generation facilities totaling 298.5 megawatts and associated transmission facilities in North Dakota and Iowa.
No, the loan is entered into by Heartland Wind II, LLC, an indirect wholly-owned subsidiary of NextEra Energy Resources, which is itself an indirect wholly-owned subsidiary of FPL Group, Inc. (the parent of NextEra Energy Inc.). Furthermore, the loan is 'limited-recourse,' meaning NextEra Energy Resources' obligation is limited to the assets pledged as collateral for the loan.
The loan is an approximately $343 million, limited-recourse, senior secured, variable rate term loan. Interest will be paid quarterly, and the principal will be partially amortizing with a balloon payment due in May 2017. The loan is secured by the wind generation and transmission assets being developed, as well as certain other assets of Heartland Wind II and its ownership interest.
The primary risks are those inherent in any construction project and debt financing. These include potential construction delays or cost overruns, performance issues with the wind generation facilities, changes in electricity prices, and the possibility of default under the loan agreement, which would trigger acceleration of payments and potential loss of the pledged assets. The variable interest rate also introduces risk related to potential increases in borrowing costs.