SunEdison, together with institutional investors advised by J.P. Morgan Asset Management – Global Real Assets, announced on September 8th a strategic partnership to fund renewable energy projects in both operating and construction stages. Under the partnership commitment, J.P. Morgan's clients are expected to provide equity to purchase renewable energy projects developed or purchased by SunEdison. Remaining project costs are expected to be funded with traditional, non-recourse commercial bank debt and tax equity.
This partnership, which will be majority owned by J.P. Morgan's clients, and may be expanded with the agreement of both partners, is initially expected to fund the purchase of a 33 percent interest, valued at $300 million, in a 425 megawatt (MW) AC portfolio of solar assets owned by Dominion. Both KeyBank N.A. and Santander Bank, N.A. have committed to provide project debt financing, subject to certain conditions.
Proceeds from the strategic partnership with J.P. Morgan Asset Management's Infrastructure Investment Group are expected to provide for payment of an agreed upfront development margin. SunEdison would have the ability to repurchase these projects from the partnership and any projects not called by SunEdison would continue to be owned by the partnership. The partnership also contemplates the acquisition of new development projects into mid-2016, providing an ongoing source of capital for SunEdison projects ready to go into construction or operation.
"This partnership supports SunEdison's growth strategy while strengthening our liquidity," said Paul Gaynor, executive vice president of SunEdison's EMEA and Americas business unit. "Attracting strong investors such as J.P. Morgan Asset Management reinforces the breadth and depth of demand for ownership of renewable energy assets. We are pleased to leverage this new partnership to invest in Dominion's diverse, domestic portfolio of solar assets without using any equity from SunEdison. This is our third transaction announced with Dominion in the last month."
"We are pleased to have this opportunity to pursue this partnership with the leading global renewable energy company," said Matt LeBlanc, chief investment officer of OECD Infrastructure at J.P. Morgan Asset Management – Global Real Assets. "These high-quality projects represent a significant and attractive investment in viable, long-term infrastructure assets for our investors in alignment with our partner, SunEdison."
SunEdison's interest in the partnership's ownership stake in the solar portfolio will be added to the Call Right Projects List for TerraForm Power, Inc. The partnership creates additional asset storage capacity for SunEdison projects under construction and operation. The partnership will support incremental flexibility and long-term growth for both SunEdison and TerraForm Power as well as the ability for J.P. Morgan's clients to deploy capital into high-quality renewable energy projects.
The partnership's 33 percent stake in Dominion's solar portfolio includes 24 projects in six states. All of the projects are unlevered, operating or will be operating by the end of 2015, and fully-contracted with power purchase agreements with major utilities and off-takers. This is one of three transactions with Dominion in the last month for SunEdison, as Dominion has invested approximately $830 million to acquire 50 percent cash equity and 99 percent tax equity interest in SunEdison's Four Brothers and Three Cedars solar projects in Utah which total 685 MW DC.
Completion of the formation of the strategic partnership and the financial close of the related project-finance debt facility is subject to customary conditions and approvals. KeyBanc Capital Markets served as an advisor to SunEdison on the strategic partnership with J.P. Morgan Asset Management – Global Real Assets.