Kwoiek Creek Resources Limited Partnership, the entity which owns the Kwoiek Creek project, is equally owned by Innergex and the Kanaka Bar Indian Band.
The $168.5M construction loan will carry a fixed interest rate of 5.075%; it will convert into a 39-year term loan upon the start of the project's commercial operation and will amortize over a 36-year period starting three years from then. The financing has been arranged with a group of life insurance companies comprising The Manufacturers Life Insurance Company as agent and lead lender, and also The Canada Life Assurance Company and The Great-West Life Assurance Company as lenders.
"We are very satisfied with the terms of this financing agreement. We are especially pleased to have secured fixed-rate debt financing with a term of nearly 40 years, which corresponds to the duration of the power purchase agreement for this project" states Michel Letellier, President and Chief Executive Officer of the Corporation. "We continue to limit our exposure to interest rate fluctuations, consistent with our strategy of derisking our business model."
The 49.9MW Kwoiek Creek hydroelectric project is located on reserve lands on Kwoiek Creek, a tributary to the Fraser River. The project is being developed through a 50-50 partnership with the Kanaka Bar Indian Band. Construction began in the fourth quarter of 2011 and commercial operation is expected to begin in the fourth quarter of 2013. Kwoiek Creek's average annual production is estimated to reach 215,000MWh, enough to power approximately 22,000BC households. All of the electricity produced will be covered by a 40-year power purchase agreement with BC Hydro, which was obtained under that province's 2006 Call for Tenders for clean energy and which provides for an annual adjustment to the selling price based on a portion of the Consumer Price Index. The proceeds of the financing will be used to fund the total project costs, as well as the settlement of the bond forward contracts used to fix the base borrowing rate.
