Suzlon Energy buys Big Sky Wind Park from Mission Energy in debt swap deal
By Ravi Kunder
02 April 2014
Wind turbine maker Suzlon Energy today struck a deal to buy the troubled US wind farm project, Big Sky Wind Park, from California-based Edison Mission Energy in a debt swap deal.
The Mumbai-based company is acquiring Big Sky Wind Park through its wholly-owned Chicago-based North American subsidiary SWECO.
Although Suzlon did not reveal the financial details of the deal, it seems to have acquired Big Sky Wind Park in lieu of debt owed to it for the supply of turbines to Edison Mission in 2009.
In order to bag the 114-turbine order, Suzlon had offered to finance Big Sky Wind Park's debt despite Edison Mission not having a long-term contract to sell power from the project in order to ensure financial stability of the wind farm.
Although turbine manufacturers do fund wind farm projects, but only when there's a long-term power purchase contract in place.
Located in Illinois, a little over 100 miles west of Chicago, Big Sky Wind Park started operations in 2011. It comprises of 114 S88 turbines generating 240 megawatts of electricity - enough to power more than 100,000 homes at full capacity.
In 2012, Suzlon started discussions with Edison Mission on restructuring the debt and later sued Big Sky Wind LLC, the unit operating under Edison Mission, for early repayment of the loan amounting to $228 million.
But wholesale power prices dropped shortly thereafter, and Edison Mission filed for bankruptcy protection in December 2012 with more than $6 billion in debt after several quarters of financial losses.
In October 2013 NRG Energy Inc, one of the biggest electricity producers in the US, stepped in and offered to buy Edison Mission and its assets out of bankruptcy for $2.6 billion in stock and cash.
NRG had earlier said that it was under no obligation to pay off Big Sky's debt, but the US bankruptcy court in Chicago last month approved the NRG- Edison Mission deal with unsecured creditors' expected to recover over 80 per cent of their claims from a prior estimate of about 58 per cent.
It now appears that NRG and Edison Mission have entered into an amicable deal with Suzlon, but it is still not clear how the turbine manufacturer will make Big Sky profitable.