Resources

Transactions

MATL Becomes First Project Financed by US Green Energy Stimulus Program

Published: 03/02/2010

By Suhuyini Abudulai, Peter A. Dunne, Tilly Gray, David Swain

Cassels Brock client Tonbridge Power Inc. became the first organization to secure financing from US President Barack Obama's American Recovery and Reinvestment Act's clean energy stimulus budget for the construction of the Montana Alberta Tie Line (MATL), the first privately built, "merchant" transmission line constructed in the US.

On October 27, 2009, Tonbridge Power Inc. together with its Montana Alberta Tie Ltd. and MATL LLP subsidiaries, as financees, completed a US$161 million financing with Western Area Power Administration ("Western"). The financing will be used to fund the construction of the MATL transmission line and is provided by Western under the US Department of Energy through the borrowing authority granted by American Recovery and Reinvestment Act.

The financing contemplates two phases: construction financing and term financing. Once construction has been completed and the line is commercially operational, the amount outstanding on the construction financing will convert to a 30-year term financing at an annual rate equal to the 30-year US Treasury cost of funds.

Lauded by officials from both Montana and Alberta, construction of the Montana Alberta Tie Line began in late 2009. Four years in the making, MATL is a 214-mile trans-border power transmission line designed to carry between 300-600 megawatts of power generated by wind energy between southern Alberta and northern Montana. MATL is part of the US Department of Energy's strategy to integrate renewable energy sources into the US electrical grid and represents the first of the 12,000 miles of additional transmission lines needed in the US to achieve 20 percent wind electricity by 2030. It is estimated that the transmission line will spur US$1 billion in wind farm development, greatly expanding the wind energy industry in Montana. Currently, MATL has transmission agreements with four wind energy generators.

Cassels Brock acted for Tonbridge Power Inc. with a team that included Peter Dunne (Securities), Howard Burshtein (Securities), David Swain (Securities), Renate Herbst (Financial Services), Tilly Gray (Financial Services), Jennifer Reed (Financial Services) and Suhuyini Abudulai (Financial Services).