NextEra Energy Partners LP closed its acquisition of an approximately 1,388-MW portfolio of wind and solar projects from corporate affiliate NextEra Energy Resources LLC for $1.28 billion in cash.
NextEra Energy Partners is a yieldco managed by NextEra Energy Inc., which also is the parent of NextEra Energy Resources.
As part of the deal, the partnership also assumed $930 million in tax equity financing and $38 million of nonrecourse project debt as of year-end 2018.
NextEra Energy Partners funded the cash portion of the deal with cash on hand and approximately $750 million drawn under an existing revolving credit facility of NextEra Energy US Partners Holdings LLC, which was subsequently repaid using the proceeds of a class B investment by a BlackRock Global Energy & Power Infrastructure-managed fund.
BlackRock Global Energy & Power Infrastructure, which is managed by asset manager BlackRock Inc., acquired a 100% class B interest in NEP Renewables LLC for approximately $750 million under a membership interest purchase agreement. NEP Renewables owns 100% of the membership interests in the portfolio.
The class B investment represents an approximately 59% investment in NEP Renewables. NEP Renewables Holdings will retain 100% of the class A interest, representing an approximately 41% investment in NEP Renewables, and NEP will consolidate NEP Renewables.
The fund is expected to earn an effective coupon of approximately 2.5% over the initial three-year period, representing its initial 15% allocation of distributed cash flow from the portfolio. After three years, NEP will receive 20% of NEP Renewables' cash distributions and BlackRock will receive 80%.
NextEra Energy Partners has the option to buy out the fund's equity interest for at least 70% of the buyout price in NEP non-voting common units at the then-current market price, with the balance paid in cash. But if NextEra Energy opts not to exercise its buyout right, the fund's allocation of distributable cash flow from the portfolio would increase to 80%.
The transaction involved the 20-MW Mountain View Solar Plant in Clark County, Nev., and the following wind projects: the 120-MW Bluff Point facility in Jay and Randolph counties, Ind.; the 98-MW Breckinridge project in Garfield County, Okla.; the 150-MW Carousell facility in Kit Carson County, Colo.; the 90-MW Cottonwood facility in Webster County, Neb.; the 46-MW Golden Hills North project in Alameda County, Calif.; the 200-MW Albercas Wind Energy Project (Javelina 2) facility in Webb County, Texas; the 206-MW Kingman Wind Energy Center in Kingman County, Kan.; the 208-MW Ninnescah facility in Pratt, Kingman and Sedgwick counties, Kan.; and the 250-MW Rush Springs project in Grady and Stephens counties, Okla.
The assets have a cash available for distribution weighted against the remaining contract life of approximately 18 years.