In late December, Seminole Electric
Cooperative, Inc., completed a major
transaction when it purchased a 650-mw
coal-fired generating plant that it had been
leasing. The acquired Unit 2, together with
Unit 1, which is also owned by the Florida-based
G&T, comprise the Seminole Generating Station, located near Palatka, about 50 miles south of Jacksonville.
“This acquisition of Unit 2 eliminates the
requirement to negotiate and pay for
numerous lessor consents, gives Seminole
operational control of the unit, provides a basis to finance pollution
control upgrades, and avoids lease renewal at rising fair
market values in the future,” Seminole Executive Vice
President and General Manager Rich Midulla said.
Seminole, which serves more than 1.6 million individuals and
businesses through 10 member distribution systems, worked
very closely with CFC in completing the acquisition of Unit 2
from Public Service Enterprise Group.
CFC partnered with JP Morgan Chase to arrange an
unsecured, 30-year, $300 million syndicated facility that
included 12 financial institutions. CFC took a sizeable
position in the financing; the pollution control revenue bonds
associated with the unit and guaranteed by CFC will remain
in place. The Rural Utilities Service provided
a critical approval to Seminole prior to 2005
year end that allowed the closing to proceed.
Midulla said the purchase of the generating
unit would produce significant benefits for
the cooperative and would lower power
costs over the remaining life of the unit.
Together with Seminole Unit 1, the plant
provides almost 60 percent of the G&T’s
energy needs.
“By arranging this private placement, CFC
continues to demonstrate that it can provide
creative financing solutions to serve as a conduit to Wall
Street for meeting G&T financing needs and to bring the
necessary parties together to complete the transaction,”
Sheldon Petersen, CFC governor and CEO, said.
Significantly, the Seminole syndication involves long-term
financing. “The deal was oversubscribed,” Petersen said, “indicating the strong interest by institutional investors
in working with CFC to finance the electric cooperative
industry.”
Seminole CFO John Geeraerts said, “We greatly appreciate
CFC’s role of serving as both a facilitator and a direct lender
for this time-sensitive financing, including managing the
interaction with Wall Street and partnering with RUS.”
