Company Overview:
The Enpower energy recovery generation projects consisted of two sites located near Kamloops, British Columbia and 150 Mile House, British Columbia. Each site had 5.89MW of installed capacity. Energy generation is from the recovery of waste heat from two separate Spectra Energy compressor stations. The electricity was sold to BC Hydro under separate 20-year electricity purchase agreements expiring in 2028.
Transaction Description:
In 2008, the CFI Fund I invested $3.9 million in Pristine Asset LP (CFI Fund I owned 50% of Pristine Asset LP, and 49% of the related GP) as an equity contribution for the underlying Enpower Green Energy Generation plants. Pristine Asset LP owned 50% of the Enpower projects. The Enpower plants cost approximately $32 million to build and were financed with equity from CFI Fund I and its partner, together with approximately $24 million of 10-year fixed-rate senior debt. CFI Fund I did not make its equity investment in these plants until construction was complete. Accordingly, CFI Fund I viewed this as a lower risk opportunity.
In late 2011, an agreement was reached to sell the CFI Fund's ownership stake back to Veresen Inc. (the $2 billion market capitalization energy company that owned the other 50% of Pristine Asset LP, and a direct 50% interest in the Enpower projects).
CFI Role:
The developers of this project were known to CFI, and David Bell played a role in sourcing this opportunity. David Bell and James McBride were involved in all aspects of the transaction evaluation, deal structuring and legal closing. Kevin Andrews and David Bell served on the Board of Directors.
Investment Thesis:
Given the long-term agreements with BC Hydro, it was expected that the project would generate attractive returns for CFI Fund I. Given the lack of construction risk, this investment represented a lower risk opportunity for CFI Fund I. The transaction also provided an opportunity to build a relationship with the developer and to partner on additional projects.