from CT Green Bank March 27 meeting of the Deployment committee. Putting the full item because I like extensive DD and this gives some interesting background on some of their recent finances. This was later approved... CT Green Bank helped pay for Triangle. There are other ones but this is enough I think.
4. Investment Business
a. Proposed Reallocation of Exposure to FuelCell Energy Credit Exposure
Mr. Hunter presented reallocation of credit exposure by detailing FCE’s acquisition of
the Bridgeport Fuel Cell Project from Dominion Energy. Liberty Bank and Fifth Third
Bank (Ohio based) are the Senior co-lenders at $25Mil with the CT Green Bank
(“Green Bank”) providing a $6Mil subordinate loan—reallocated from existing loan
BFCP. FCE is ready to go next week and the closing will be by Friday, April 12, 2019.
The existing loan transaction requires a Project Special Project Vehicle (SPV) to place
a “performance assurance” with Eversource as required under the Energy Purchase
Agreement (EPA). The current performance assurance is satisfied with a corporate
guaranty from Dominion. However, FCE’s SPV will need to source a letter of credit to
satisfy this requirement; letter of credit will need to be cash collateralized for $1.8Mil.
Similar to the existing loan to FCE, the proposal is to fund the cash collateral needed
to backstop the letter of credit for Eversource by reallocating exposure from theTriangle project. The Green Bank Board previously approved the Triangle Project in
2018 and the proposal is to reduce the exposure to the Triangle project from $5Mil to
$3.2Mil (a reduction of $1.8Mil).
Ms. Bronisz asked about the change from Webster Bank N.A. (“Webster”) to another
lender (i.e., Fifth Third). Mr. Hunter responded that Webster’s prior credit officer for
that region had already approved the deal but—after a change of personnel—the new
officer decided not to proceed with full approval. Since The Fifth Third Bank already
had a construction loan approval for the New London Subbase transaction underway,
they were able to quickly diligence the Bridgeport transaction and approved the deal.
Ms. Bronisz stated that Webster is missing out on transaction and hopeful that they
may be able to make offerings in the future. Ms. Bronisz also asked about whether
an engineer was hired by Green Bank. Mr. Hunter stated that an engineering firm was
hired by the other financiers and Green Bank benefitted from that review.
Mr. Hunter further related that the Green Bank has successfully repositioned FCE
projects (Bridgeport and Groton) from higher cost private equity and specialty lender
funding to mainstream local and regional bank lenders (Liberty Bank, Fifth Third Bank
and Amalgamated Bank). Using Green Bank capital subordinated to senior lenders—
$66Mil has been sourced using $11Mil of Green Bank capital (6:1). The Bridgeport
project prepays in 6 years (to Sr lender) and 7 years (to Green Bank). The proposal
is to lend at the parent level approximately $1.8Mil to cash collateralize the letter of
credit for Eversource; security is FCE parent resources, additional security at the
Project SPV level—subordinated to Sr lenders and cash flow sweep (after Green Bank
subordinated loan). With anticipated cash flow and 50% sweep, Green Bank
Performance Assurance Financing Facility is expected to repay 9 months before $6Mil
subordinated loan (6¼ years). Both facilities will benefit from and be repaid with an
additional $40Mil of free cash flow (the last 3-to-4 years of Eversource contract) after
repayment of all debt for the acquisition.
Mr. Hunter reviewed the proforma cash flows and noted that the modules will have
been refreshed after year five and cash flow will be available to pay down Jr debit
balance in year six. Mr. Hunter completed the presentation with a review of the tables
summarizing the current and future credit exposure for all three projects; Bridgeport,
Groton and Triangle in accordance with reallocation proposal, a review of FCE credit
exposure and the recommendation to Board Resolution.
Mr. Hunter related that this work is the successful achievement of diverse financing
