Carlsbad Desalination Project is Named "Deal of the Year"
March 11, 2013
Houston, TX. -- Project Finance magazine has awarded “North American Water Deal of the Year 2012” honors to the Carlsbad Desalination Project, a $1 billion project financing implementing a public-private partnership between Poseidon Resources and the San Diego County Water Authority. The award recognizes innovation, deal repeatability, best practices, problem solving, risk mitigation, value for money, and speed of delivery in the financing of infrastructure projects.
Clean Energy Capital served as financial advisor to the water authority and acted as lead arranger on the transaction. “We are proud that the Carlsbad Desalination Project has been recognized with this honor,” said David M. Moore, Managing Director of Clean Energy Capital, “and we congratulate the entire deal team on their amazing work to bring this complex transaction to a close.”
The project is the culmination of a decade of development effort, and is the first large-scale ocean-water desalination project on the Pacific coast. The transaction features a 30-year water purchase agreement between the water authority and Poseidon that allows the water authority to transfer certain key risks to Poseidon, while supporting project financing at the investment-grade level. The capital structure includes $756 million tax-exempt bonds issued by the California Pollution Control Financing Authority on behalf of Poseidon and the water authority, $167 million of private equity invested by Stonepeak Infrastructure Partners, and $80 million in improvements to be made by the water authority to accommodate this new supply of water.
Water authority board approval of the water purchase agreement on November 29, 2012 was preceded by more than 40 public board meetings. “Clean Energy Capital played a central role in helping our board thoroughly vet this transaction,” said Thomas V. Wornham, chairman of the board for the water authority. “They provided crucial assistance in establishing commercial terms that our board could understand and accept. Their help was invaluable in closing the transaction.”
The transaction reached financial closing on December 24, 2012. The bond underwriting syndicate was led by JP Morgan. Hawkins Delafield & Wood served as project counsel to the water authority, while Poseidon was represented by Dickstein Shapiro. Drinker Biddle & Reath and Orrick Herrington & Sutcliffe served as underwriters’ counsel and bond counsel, respectively.
Sandra L. Kerl, the water authority’s deputy general manager, led the water authority’s deal team. Ms. Kerl said, “David Moore and his team brought exceptional expertise to this complex transaction. Clean Energy Capital knows private-sector project finance as well as they know public finance. Their understanding of both sides of this transaction, and their ability to coordinate the deal team, were noted by all parties.”