Panda Power secures financing for new 758 MW gas-fired power plant

Source: Panda Power Funds

Panda Power Funds announced that its affiliate Panda Sherman Power, LLC has successfully completed the financing on its planned 758-megawatt natural gas-fired, combined-cycle power plant in Sherman, Texas. The company will immediately start construction on the 204-acre site and expects commercial operations to begin by the end of 2014.

Goldman Sachs and Credit Suisse arranged the senior debt financing for the plant. Ares Capital was the documentation agent. The transaction marks only the second time in six years that a capital-intensive, greenfield construction project has been financed with a term loan. The other financing was for Panda’s 758-MW Temple, Texas generating station which occurred in July of this year. Panda Power Funds is supplying equity for the Sherman project along with several other institutional co-investors.

“The financing market that was tough as nails two months ago is starting to show signs of movement in our direction,” said Todd W. Carter, president and senior partner of Panda Power Funds. “While it was still a long, hard march to closing, calls were coming in to us from many different quarters to be a part of this project.”

The Panda Sherman project has been strategically sited in an area that will serve one of the fastest growing regions of the United States. According to the U.S. Census Bureau’s latest data, eight of the 15 fastest growing cities in the United States are located in Texas. Of these cities, five are located in North Texas. Similarly, the North Texas Council of Governments has projected that the North Texas area will swell from the current population of 6.6 million to more than 9 million people by 2030. This equates to an additional 930,000 homes, 640 new schools, 40 new hospitals, 340 new neighborhood retail centers and 56 million square feet of new office space.

Sherman, Texas Mayor Bill Magers said the generating facility will provide the power necessary to locate future commercial enterprises in the North Texas region. “Companies looking to relocate to our area must know they’ll have a dependable supply of electricity to power their factories and places of business. It’s really quite simple — power equals growth.”

“The Panda plant will have an immediate impact on our economy,” added Scott Connell, president of the Sherman Economic Development Corporation. “With construction comes expanded payrolls, added revenues for subcontractors, suppliers, service providers, hotels, restaurants, retailers and many other businesses. This plant will also enlarge the tax base which will help Sherman provide services to its residents.”

According to a study conducted by Impact Data Source of Austin, Texas, the plant will contribute an estimated $1.7 billion to the area’s economy during construction and the facility’s first 10 years of operation. Approximately 700-800 jobs will be created to construct the Sherman power plant at peak construction. During operations, the generating station will create an estimated 27 skilled jobs to operate the facility and 45 indirect jobs within the community to support the plant.

The Sherman plant will utilize state-of-the-art combustion turbine and emissions-control technology, making it one of the cleanest, most efficient natural gas-fired power plants in the United States.

Panda Power Funds selected a turn-key consortium of Bechtel and Siemens Energy Inc. to build the generation facility. The firms are two of the largest power contractors and technology providers in the world. As a part of the contract, Siemens will provide the power island package including the natural gas turbines, steam turbine, waste heat recovery boilers, and instrument and control systems. Bechtel will be responsible for the engineering and procurement for the balance of the plant, and the installation, construction and commissioning of the facility.

The generating station will be located at Progress Industrial Park 3 in South Sherman. When completed, the generating station will be able to supply the power needs of approximately 750,000 homes in the North Texas area.

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