North America: Teasers circulate for Astoria Energy I and II sale

30 May 2018 - 12:00 am UTC

Sponsors of Astoria Energy I and Astoria Energy II chose Morgan Stanley and PJ Solomon as advisors on the sale of the two combined-cycle, gas-fired generation assets in New York, Inframation has learned.

The advisors distributed teasers this week, it is understood. The timing on the process has yet to be finalized.

Astoria Energy I (575MW) and II (575MW) began operating in 2006 and 2011, respectively. Each facility comprises two GE 7241FA combustion turbines, according to a permit from the New York State Department of Environmental Conservation.

The two assets feature different risk profiles: while Astoria II has a power purchase agreement (PPA) with the New York Power Authority until 30 June 2031, Astoria I sells its output to the New York Independent System Operator (NYISO) on a merchant basis. Its previous offtake contract with the Consolidated Edison Company of New York expired in May 2016.

Astoria Energy I had USD 714m in outstanding senior secured term loan B (due December 2021) and a USD 70m revolving credit facility as of May 2017, according to a report from Moody’s Investors Service, which downgraded the loan to B1 due to “substantial leverage” and a tough capacity and energy market. The facility has a heat rate of roughly 7,300 Btu/kWh and a capacity factor of about 70%, Moody’s noted. The Morgan Stanley-led term loan B was priced in 2014 at 400bps over Libor, with a 1% floor and an original issue discount (OID) of 98, according to sister publication Debtwire.

As of 2014, Astoria Energy I’s equity sponsors were ENGIE (45%), Mitsui & Co. (37%), East River (13%), a fund owned by Harbert Power Fund V and JEMB, and AE Investor (5%). AMP Capital’s two debt funds – Fund I and Fund II – also provided a USD 100m subordinated financing for the asset in 2014, as reported.

As reported, Astoria Energy II recently amended its existing bank loan facility, repricing the USD 931m term loan A (due 2024) to a flat margin of 150bps over Libor and modifying the change-of-control provision to allow the sale of the asset. 

Harbert-managed funds (63.2%), Engie (30%) and SNC-Lavalin (6.8%) are the equity holders in Astoria Energy II, according to a FERC filing from October 2013. Engie announced in 2011 that the project cost roughly USD 1.3bn to build.

PJ Solomon declined to comment. Morgan Stanley and Astoria Energy LLC did not immediately respond to calls for comment. 

Astoria Energy