Page 38 - CCCA 226419 Magazine Fall 2014

{ sPotligHt oN… } eXcellence In collaBoratIon: muskrat Falls By Bev Cline the project secure fnancing that responded to the international banks. TD Securities came In December 2013, the $5 billion fnancing needs of Canada, as guarantor, and the onboard as lead on the fnancing, with for the Muskrat Falls Hydroelectric Gener- needs of the project companies them- Goldman Sachs as part of the team, along ating Facility, the Labrador-Island Trans- selves,” explained Xeno Martis, partner with a broader syndicate of banks. What mission Link and the Labrador Transmis- with Fasken Martineau in Montreal, who we achieved is $5 billion in fnancing—all sion Assets reached fnancial close. This headed the frm’s team as lead project in the bank from day one—with the in- was the single largest infrastructure fnanc- fnance counsel to Nalcor Energy. “For terest rate locked in at a very competitive ing in Canadian history. Nalcor and the Newfoundland govern- rate on average of 3.8 per cent for the next Slated for frst power in 2017, the proj- ment a principal criteria was certainty 35 years for Muskrat Falls and the Labra- ect is being developed by Nalcor Energy, of amount and certainty of pricing; they dor Transmission Assets, and 40 years for a provincial Crown corporation under were not in it to assume risks or have the Labrador-Island Link.” the Government of Newfoundland and hedging arrangements which could po- “I think the key message is that, in a Labrador, created in 2007 to manage the tentially mean risk for the ratepayers of project of this nature, with, for example, province’s energy resources. In addition, Newfoundland.” fnancing, inter-governmental, environ- to monetize excess power and meet re- To respond to these multiple require- mental and regulatory complexities, it was newable energy needs in Nova Scotia, Na- ments, he continued, “we created a modi- important for all the stakeholders to work lcor Energy is partnering with Emera Inc., fed wrap structure which sheltered the together from the outset to establish the an international energy and services com- lenders from any project risk and provided principles and objectives and gain a com- pany headquartered in Halifax. Emera is them with direct recourse to Canada, as mon understanding of how you’re going responsible for fnancing and construct- the Sovereign Guarantor, with an uncon- to move forward,” said Meaney. “To the ing the Maritime Link. ditional and irrevocable payment obliga- extent you can, stick to those objectives, tion on the part of the Sovereign, subject to but also, as you get thrown curveballs effective collaboration no defences and access to the consolidated along the way, you need to be adaptable.” The Muskrat Falls project is an instructive revenue fund of the Sovereign with no re- case study in effective collaboration be- quirement for any annual appropriations. Interesting for In-house counsel tween several parties, each with different The fnancing was structured in order for The fle was both interesting and chal- motivations, goals, strategies and perspec- Canada’s AAA credit rating to be trans- lenging for in-house counsel, said Todd tives. It was therefore the topic of an edu- ferred to the project such that the pricing Stanley, assistant deputy minister, Courts cation session at the CBA Legal Conference for the debt would very closely approxi- and Legal Services, Department of Justice held in St. John’s, NL, in August. mate that of the AAA Sovereign.” (DOJ), Government of Newfoundland Financing was a key factor for success, According to James Meaney, general and Labrador. “From our government’s requiring the cooperation of the various manager of fnance for Nalcor’s Lower point of view, the Muskrat Falls project stakeholders, which included the Gov- Churchill Project, the request for fnanc- was an unprecedented situation. On cer- ernment of Canada, the Government of ing was a “very competitive process, in tain aspects of the fle our client’s interests Newfoundland and Labrador, the Gov- which 17 fnancial institutions were in- were directly aligned with Nalcor, such as ernment of Nova Scotia and private sec- vited to participate, including all the large in discussions with the federal govern- tor lenders. “The critical aspect was to Canadian banks, as well as some large ment over the loan guarantee. But on 38 CCCa Magazine | Fall 2014 autoMne