Alterra Power Corp. and Inovateus Solar LLC have announced the closing of an $8.9 million construction loan facility for the Kokomo solar farm, an approximately 7 MW project located in Kokomo, Ind.
According to Alterra, the facility is supplied by 1st Source Bank, a subsidiary of 1st Source Corp., and consists of an $8.9 million construction loan plus a $150,000 letter of credit. Concurrently with the construction loan closing, 1st Source is providing a $4 million tax equity investment commitment and a $5 million term loan takeout, which will be used to repay the construction loan upon commencement of commercial operations (each subject to typical conditions precedent). The term loan will have a balloon payment based on a 10-year maturity and 18-year amortization. The term loan proceeds will be used to pay for the portion of remaining project costs not paid by the tax equity investment.
Separately, Alterra has completed its previously announced partnership agreement with Inovateus. Alterra will hold a majority interest of 75% or more in the project, though the final partnership allocations are subject to change under certain circumstances prior to term loan conversion.
The Kokomo solar project is currently under construction and is expected to begin commercial operations in December. The project is contracted under a 20-year power purchase agreement with Duke Energy Indiana for 100% of the plant’s output. Construction is being managed by Inovateus, which will also provide operations and maintenance services under a long-term contract. Alterra will manage and administer the project.
Notably, Alterra and Inovateus are actively developing a second solar project, a 13 MW site located in Michigan, which is expected to enter construction in 2017. That project is contracted under a 25-year, investment-grade power purchase agreement.
“We’re pleased to complete the Kokomo financing on commercially favorable terms with 1st Source and Inovateus, and we look forward to building the Michigan solar project next year,” said Jon Schintler, vice president of project finance at Alterra. “We look forward to advancing these relationships as we develop and build further projects together.”