Financing resumes on TECO Energy/Panda Energy independent power projects
TAMPA, January 22, 2002
TECO Power Services Corporation and Panda Energy International, Inc. today announced that they have resolved all outstanding issues related to the $1.6-billion, five-year non-recourse bank financing for the construction of the two largest independent power projects in the nation, and that funding has resumed.
NEPCO, a subsidiary of Enron Corp., is the engineering, procurement and construction (EPC) contractor for the Union and Gila River projects. Because Enron had guaranteed NEPCO’s obligations under the construction contracts, the bankruptcy of Enron permitted the project lenders to stop funding construction costs for the two projects until the condition was cured or waived.
To resolve the issue, TECO Energy replaced Enron as the guarantor of certain of NEPCO’s obligations under the construction contracts for these two projects, including payment by the company of any project cost overruns, which are currently estimated at $63 million. This amount could be offset by unused construction contingency upon the completion of construction.
NEPCO is also serving as EPC contractor for two projects wholly owned by TECO Power Services, the Dell and McAdams power stations. The company has now resumed its activities to obtain financing for those projects.
TECO Power Services Corporation is a wholly owned subsidiary of TECO Energy, Inc. (NYSE:TE), a diversified, energy-related holding company headquartered in Tampa. Other TECO Energy businesses include Tampa Electric, Peoples Gas System, TECO Transport, TECO Coal, TECO Coalbed Methane and TECO Solutions. TPS builds, owns and operates electric generation facilities with emphasis on high growth areas of North America. Domestically, announced projects call for TPS to serve customers in 18 states, spanning the southern half of the United States. TECO Energy as a whole has net ownership interests in nearly 11,000 megawatts of generating capacity, either operating, in construction, or in advanced stages of development worldwide.
Headquartered in Dallas, Texas, Panda Energy International, Inc. is a privately held, non-regulated electric generation company whose primary focus is the development, ownership and operation of state-of-the-art, environmentally clean, low-cost power plants. The company recently arranged the financing of $2.2 billion to construct the nation’s two largest natural gas power plants located in Eldorado, Arkansas and Gila Bend, Arizona. The company owns and operates plants in Roanoke Rapids, North Carolina; Brandywine, Maryland and Nepal, and it has an ownership in four 1,000-megawatt plants it developed in Guadalupe County, Paris and Odessa, Texas and Oneta, Oklahoma. Panda has developed 9,000 megawatts that are either under construction or in commercial operation. Panda also has 10,000 megawatts of electric generating capacity currently in advanced development.
Note: This press release contains forward-looking statements, which are subject to the inherent uncertainties in predicting future results and conditions. Certain factors that could cause actual results to differ materially from those projected in these forward-looking statements include the joint venture's ability to successfully complete the Gila River and Union projects on budget and according to plan. Additional factors are discussed under "Investment Considerations" in TECO Energy's Annual Report on Form 10-Q for the period ended June 30, 2001, and reference is made thereto.