Duke Energy Renewables and Sumitomo Corp. of America, the U.S. subsidiary of Sumitomo Corp., finalized their 50-50 ownership arrangement for two wind farms in Kansas and secured $353 million in financing for construction and operating costs.
Duke Energy Renewables, a commercial business unit of Duke Energy (NYSE: DUK), announced plans on March 27 to sell a 50 percent stake in the 131 MW Cimarron II Windpower Project in Gray County and the 168 MW Ironwood Windpower Project in Ford County to Sumitomo. The companies will complete construction of both wind farms later in 2012.
The financing, which closed April 18, consists of a construction and term loan facility of approximately $330 million and a letter of credit facility totaling roughly $23 million. The lenders involved in the deal were Sumitomo Mitsui Banking Corp. (NYSE: SMFG), Mizuho Corporate Bank Ltd., and Bank of Tokyo-Mitsubishi UFJ Ltd.
Vinson & Elkins and Kirkland & Ellis provided legal counsel to Duke Energy Renewables and Sumitomo, respectively, during the formation of the joint venture. Chadbourne & Parke represented the joint venture partners in the financing effort. Milbank, Tweed acted as legal counsel to the lenders.
Kansas City Power & Light will purchase all of the electricity and associated renewable energy credits (RECs) produced by Cimarron II under the terms of a 20-year agreement. Westar Energy (NYSE: WR) will buy all the power and RECs produced by the Ironwood wind farm through a 20-year agreement.
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