What is the purpose of the $232 million loan obtained by Canyon Wind, LLC?

The loan proceeds are primarily intended to reimburse NextEra Energy Resources (an indirect subsidiary of NextEra Energy, Inc.) for its capital contributions towards the development and construction of two wind generating facilities with a combined capacity of approximately 219 megawatts, located in Arizona and Michigan.

How is NextEra Energy, Inc. (NEE) exposed to this debt obligation?

While the loan is primarily limited-recourse to Canyon Wind's assets, NextEra Energy Capital Holdings, Inc. (a wholly-owned subsidiary) guarantees slightly more than half of the debt payment obligations until early 2013, subject to certain conditions related to the Michigan facility. Furthermore, NextEra Energy, Inc. itself guarantees the payment obligations of Capital Holdings, providing an ultimate corporate backstop for a portion of the debt during this specified period.

What measures are in place to manage interest rate risk for this loan?

Canyon Wind has entered into several interest rate swaps upon the funding of the loan. These swaps are designed to hedge against potential fluctuations and increases in the three-month London InterBank Offered Rate (LIBOR), which is the basis for the variable interest rate on the loan.

When is the debt expected to be fully repaid, and what secures the loan?

The loan matures in December 2030. The repayment of the loan is secured by liens on the assets of the wind generating facilities in Arizona and Michigan, as well as certain other assets and ownership interests within Canyon Wind and its direct subsidiaries that own the facilities.

NEXTERA ENERGY INC 8-K: Financial Events

Summary

NextEra Energy Inc. (NEE) disclosed via an 8-K filing on September 27, 2012, that its indirect wholly-owned subsidiary, Canyon Wind, LLC, secured approximately $232 million in a limited-recourse senior secured variable rate term loan. The loan, maturing in December 2030, will fund capital contributions for the development and construction of two wind generating facilities totaling approximately 219 megawatts in Arizona and Michigan. This financing is structured with interest rate swaps to hedge against potential increases in the London InterBank Offered Rate (LIBOR). While primarily recourse to Canyon Wind's assets, NextEra Energy Capital Holdings, Inc. (Capital Holdings), a wholly-owned subsidiary of NEE, provides a guarantee for over half of the debt payment obligations until early 2013, contingent on certain conditions for the Michigan facility being met. NextEra Energy Inc. itself also guarantees the obligations of Capital Holdings. This transaction highlights NEE's continued investment in renewable energy infrastructure and its strategy to finance these projects through debt, with provisions for interest rate risk management and corporate guarantees for a limited period.

Key Highlights

1Canyon Wind, LLC (indirect subsidiary of NEE) obtained a $232 million senior secured term loan.
2Loan proceeds will finance the development and construction of two wind generating facilities totaling 219 MW in Arizona and Michigan.
3The loan matures in December 2030 and carries a variable interest rate tied to LIBOR plus a specified margin.
4Interest rate swaps have been implemented to hedge against potential increases in LIBOR.
5NextEra Energy Capital Holdings, Inc. (NEE's subsidiary) guarantees slightly more than half of the debt payment obligations until early 2013, subject to certain conditions.
6NextEra Energy, Inc. provides a guarantee for the obligations of Capital Holdings.
7The loan is secured by liens on the assets of the wind generating facilities and Canyon Wind.

NEXTERA ENERGY INC 8-K Report, Financial Obligation (Sep 28, 2012)

Summary

Key Highlights

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