What is the primary purpose of this $130 million loan?

The loan's primary purpose is to provide financing for a 668 megawatt natural gas-fired power generation facility in Alabama. Specifically, the proceeds will reimburse NextEra Energy Resources for capital contributions made towards this project.

What are the terms of the loan, including maturity and interest rate?

The loan is a $130 million limited-recourse senior secured variable rate term loan that matures in December 2019. The interest rate is tied to the three-month London InterBank Offered Rate (LIBOR) plus a specified margin, payable quarterly. The principal is partially amortizing semi-annually with a balloon payment at maturity.

How is NextEra Energy, Inc. (NEE) exposed to the risks of this loan?

As Calhoun I is an indirect wholly-owned subsidiary of NextEra Energy Resources, which is an indirect wholly-owned subsidiary of FPL Group, Inc. (the predecessor name for NEE at the time of this filing), NEE indirectly benefits from the project. The loan is described as 'limited-recourse', meaning that lenders' recovery is primarily limited to the assets securing the loan, rather than the general assets of the parent company. However, NEE's investment in the project itself carries inherent risks.

What measures are in place to manage interest rate risk?

Calhoun I has entered into several interest rate swaps immediately upon funding the loan. These swaps are designed to hedge against potential adverse movements in interest rates, effectively stabilizing the interest payment costs associated with the variable rate loan.

NEXTERA ENERGY INC 8-K: Financial Events

Summary

This 8-K filing from NextEra Energy Inc. (NEE) on December 17, 2009, details a significant financing event for its subsidiary, Calhoun Power Company I, LLC (Calhoun I). Calhoun I secured a $130 million limited-recourse senior secured variable rate term loan to partially finance its stake in a 668 megawatt natural gas-fired power generation facility in Alabama. This move allows NextEra Energy Resources, the parent entity of Calhoun I, to partially recoup capital contributions made towards the project. The loan, which matures in December 2019, carries an interest rate tied to LIBOR plus a margin, with provisions for semi-annual principal amortization and a balloon payment. Notably, Calhoun I has proactively implemented interest rate swaps to mitigate risks associated with variable interest rates. The loan is secured by the assets of the power generation facility and Calhoun I itself, and includes standard covenants and default provisions.

Key Highlights

1Calhoun Power Company I, LLC (indirect subsidiary of NEE) obtained a $130 million term loan.
2The loan proceeds are intended to fund a 668 MW natural gas-fired power generation facility in Alabama.
3The loan is limited-recourse and senior secured, maturing in December 2019.
4Interest rate is variable, based on three-month LIBOR plus a specified margin, payable quarterly.
5Calhoun I has entered into interest rate swaps to hedge against interest rate fluctuations.
6The loan is secured by the power generation facility's assets and ownership interests in Calhoun I.
7Standard default and acceleration clauses are included in the loan agreement.

NEXTERA ENERGY INC 8-K Report, Financial Obligation (Dec 18, 2009)

Summary

Key Highlights

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