DALLAS — Ohio-based American Municipal Power Inc. plans to use a portion of the proceeds from its upcoming sale of $137.5 million in tax-exempt project revenue bonds to finance the purchase of an ownership interest in the Greenup Hydroelectric Facility.
AMP will acquire 48.6% of the Greenup facility from the city of Hamilton, Ohio.
Greenup is an a 70.2 megawatt run-of-the-river hydroelectric facility located at the Greenup Lock and Dam on the Ohio River that’s been in operation since 1982. The facility has been owned and operated by the city since 1988.
“Unlike many projects where the financing happens prior to construction here we are buying into an already operating facility,” John Bentine, AMP’s senior vice president and general counsel, said during an investor presentation.
Moody’s Investors Service rated the bonds A1. Fitch Ratings assigned an A-minus and Standard & Poor’s rated the bonds A. All assign a stable outlook. The deal is scheduled to price on May 4.
Bank of America Merrill Lynch is the senior manager. Huntington Investment Co., JP Morgan, Key Bank Capital Markets, Morgan Stanley, RBC Capital Markets, US Bancorp, and Wells Fargo Securities are co-managers.
Some of the bond proceeds will fund AMP's share of capital expenses for Greenup, repay an interim line of credit, fund capitalized interest, cover a deposit into the debt service reserves, and pay issuance costs.
AMP has energy partnerships involving 133 member municipal electric systems; 47 participate in the Greenup Project.
The bonds are secured by the net revenues and other income received from AMP's 48.6% ownership interest in Greenup, including payments made by the participants under the power sales contracts.
The power sales contracts with the 47 participating members have terms that extend throughout the life of the bonds. Take-or-pay power sales contracts obligate the members to pay for their respective shares of all project costs, including debt service on the bonds, whether or not the project is operating or any power is delivered.
The acquisition of a portion of the Greenup facility is part of AMP's overall strategy to reduce power market exposure and expand hydroelectric opportunities for its participants.
It currently has four projects under various stages of construction and commissioning – Cannelton, Meldahl and Smithland in Kentucky and Willow Island in West Virginia. Each of the new plants is located at lock and dam sites along the Ohio River and fueled only by water from the river.
The Meldhal project is also being developed with the city of Hamilton which retains the rights for a 51.4% share of the energy output from the facility, with AMP taking the remaining output.
Earlier this month, AMP announced leadership changes as its longtime chief financial officer Robert Trippe and Bentine plan to retire this year.
Trippe will be succeeded by Marcy Steckman, who has been at AMP since 2013. Steckman currently serves as AMP vice president of accounting and chief accounting officer. Bentine will be succeeded by Rachel Gerrick and Lisa McAlister, who have been with AMP since 2012. Gerrick and McAllister joined AMP as deputy general counsels.
