Northland Power Inc.

TSX : NPI
TSX : NPI.PR.A
TSX : NPI.PR.C
TSX : NPI.DB.A
TSX : NPI.DB.B


Northland Power Inc.

May 14, 2014 18:04 ET

Project Gemini Reaches Financial Close

Largest Offshore Wind Project Financing to Date

TORONTO, ONTARIO--(Marketwired - May 14, 2014) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OR ITS POSSESSIONS. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Northland Power Inc. ("Northland" or "the Company") (TSX:NPI)(TSX:NPI.PR.A)(TSX:NPI.PR.C)(TSX:NPI.DB.A)(TSX:NPI.DB.B) announces closing of project financing for 600 MW project Gemini.

  • At EUR2.8 billion (approximately C$4.2 billion), it is the largest project financing to date for an offshore wind farm;
  • Strong equity consortium consisting of Northland Power Inc., Siemens Financial Services, Van Oord Dredging and Marine Contractors BV and N.V. HVC;
  • Two-contract structure for turbine supply and project construction minimizes risk;
  • Strong revenues through Netherlands sustainable energy subsidy (SDE) program;
  • Gemini will play an important role in achieving European Union's Renewable Energy Directive calling on all Member States to reach a 20% share of energy from renewable sources by 2020;
  • To date, Gemini is the largest offshore wind farm in the North Sea, which has one of the most reliable wind resources in the world.

Northland today announced that Gemini, a 600MW offshore wind project located approximately 85 kilometres off the coast of the Netherlands in the North Sea has reached financial close, having placed all of the EUR2.8 billion of equity and debt required for the project. More than 22 parties, including 12 commercial creditors, 4 public financial institutions, together with 1 pension fund and Northland as subordinated debt lenders, and the 4 members of the equity consortium were involved in the signing of the financing contracts. Gemini is the largest-ever project financed offshore wind farm.

"Today's announcement is a major achievement for Northland," noted John Brace, CEO of Northland Power. "We are very pleased with the extraordinary effort put forth by the project's financiers, as financial close was achieved in record time for a project of this nature. As the largest project financing in the offshore wind sector, today's results validate the high quality of the project and illustrate Northland's evolution from a leading Canadian power producer to an international company taking on world-class projects. We continue to demonstrate our track record of utilizing innovative financing structures and delivering superior results and significant growth, and believe Gemini is just the beginning for Northland in the burgeoning offshore wind sector."

Gemini is owned by a consortium consisting of Northland Power (60%), Siemens Financial Services (SFS - 20%), Van Oord Dredging and Marine Contractors BV (Van Oord - 10%) and N.V. HVC (HVC - 10%). SFS is an affiliate of Siemens, one of the world's leading providers of eco-friendly technology. Van Oord is a leading Netherlands-based international marine contractor with an excellent track record in offshore wind farm construction and a leading position as EPC contractor in offshore wind projects. HVC is a leading utility company of and for 48 Dutch municipalities and six water regulatory authorities. Their mission is to help the participating authorities achieve their goals in the field of energy, climate, waste and raw materials.

Northland Power, SFS, Van Oord and HVC have provided combined equity of more than EUR400 million. In addition, Northland Power and the Danish pension fund PKA have provided subordinated loans totalling EUR200 million.

Northland's total investment, including its equity investment, share purchase and subordinated loan to Gemini, is approximately C$565 million. Northland has provided additional contingent equity support to the project in the form of letters of credit totalling EUR94.8 million, and expects a previously issued letter of credit totalling EUR24 million to be returned shortly after financial close.

Northland has entered into foreign exchange contracts with several members of its corporate banking syndicate to effectively fix the foreign exchange conversion rate on substantially all projected Euro-denominated cash inflows from Project Gemini throughout the 15 year SDE term at a weighted average conversion rate of approximately 1.67 Canadian dollars per Euro.

Northland has taken a lead role in completing the remaining outstanding development activities since its participation announcement in August 2013, and intends to continue its active leadership role in the consortium during construction and operations. Concurrent with financial closing, Gemini's major construction and supply contracts and Northland's purchase of its shares in the project all became effective. The project has now commenced construction, and is expected to reach full commercial operations in 2017.

Under a two-contract project structure Siemens will supply and erect the turbines, and Van Oord will construct the rest of the wind farm; this approach minimizes risk by reducing the number of interfaces in the construction of the project to just one. In addition, Siemens will maintain the turbines over the first 15 years of the project's life. The financial sector's confidence in Gemini can be attributed to the robust structure of the project and to the electricity revenue support through the Netherlands' SDE subsidy program, which combined, provide a stable and solid investment opportunity.

Approximately 70% of the project's required financing has been provided via EUR2 billion of "non-recourse" senior secured construction and term debt financing from twelve international commercial creditors, three export credit agencies and the European Investment Bank. This type of financing requires a strong project contract structure and entails a comprehensive due diligence process. Reflecting the strength of the project, the Gemini senior financing was oversubscribed and attracted a number of institutions that have not previously lent to the offshore wind sector. The interest rate for the project has been hedged over the full loan amortization period with an effective interest rate of approximately 4.75%.

The international commercial creditors are based in North America, Asia and Europe and consist of ABN AMRO Bank, BNP Paribas, Bank of Tokyo-Mitsubishi UFJ, Deutsche Bank, Export Development Canada, Natixis, Sumitomo Mitsui Banking Corporation, Bank of Montreal, CIBC, Bank Nederlandse Gemeenten, Banco Santander and CaixaBank. The three export credit insurers are EKF from Denmark, Euler Hermes from Germany, and Delcredere/Ducroire from Belgium.

Once constructed, Gemini will be the largest wind farm in the North Sea, providing enough clean energy to supply the needs of 1.5 million people annually. Combining favourable sea bed conditions with one of the strongest and most reliable wind resources in the world, the North Sea could produce enough energy to power Europe four times over. Gemini will play an important role in helping the Government of the Netherlands achieve renewable energy targets mandated by the European Union's Renewable Energy Directive, which calls for all Member States to reach a 20% share of energy from renewable sources by 2020.

As a result of the Closing, the maturity date of Northland's aggregate C$78.8 million principal amount of 5.00% Extendible Convertible Unsecured Subordinated Debentures, Series B, issued in March, 2014, is automatically extended to June 30, 2019.

Note: Amounts related to Project Gemini are generally stated in the currency of origin. Where noted as "approximately", certain euro amounts are stated in Canadian Dollars at the approximate exchange rate in effect as of the date hereof.

ABOUT NORTHLAND

Northland is an independent power producer founded in 1987, and publicly traded since 1997. Northland develops, builds, owns and operates facilities that produce 'clean' (natural gas) and 'green' (wind, solar, and hydro) energy, providing sustainable long-term value to shareholders, stakeholders, and host communities.

The company owns or has a net economic interest in 1,379 MW of operating generating capacity, with an additional 50 MW of generating capacity currently in construction, and another 750 MW (439 MW net to Northland) of wind and solar projects with awarded power contracts. The above includes Northland's majority equity stake in Gemini, a 600 MW (360 MW net to Northland) offshore wind project in the North Sea. Northland's cash flows are diversified over five geographically separate regions and regulatory jurisdictions in Canada, Europe and the United States.

Northland's common shares, Series 1 and Series 3 preferred shares and convertible debentures trade on the Toronto Stock Exchange under the symbols NPI, NPI.PR.A, NPI.PR.C, NPI.DB.A and NPI.DB.B, respectively.

FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements which are provided for the purpose of presenting information about management's current expectations and plans. Readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects," "anticipates," "plans," "believes," "estimates," "intends," "targets," "projects," "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may," "will," "should," "would" and "could." These statements may include, without limitation, statements regarding plans for raising capital. These statements are based upon certain material factors or assumptions that were applied in developing the forward-looking statements, including management's current plans, its perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. Although these forward-looking statements are based upon management's current reasonable expectations and assumptions, they are subject to numerous risks and uncertainties. Some of the factors that could cause results or events to differ from current expectations include, but are not limited to, operational risks, foreign exchange rates, regulatory risks, and the variability of revenues from generating facilities powered by intermittent renewable resources and the other factors described in the "Risks and Uncertainties" section of Northland's 2013 Annual Report and Annual Information Form, both of which can be found at www.sedar.com under Northland's profile and on Northland's website www.northlandpower.ca. Northland's actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur.

The forward-looking statements contained in this release are based on assumptions that were considered reasonable on May 14, 2014. Other than as specifically required by law, Northland undertakes no obligation to update any forward-looking statements to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Contact Information