Clean power generation projects often require debt financing in order to generate adequate equity returns for investors. The opportunities and forms of such financing vary across projects using different energy sources, ownership structures, depending on the applicable tax and other public sector incentives as well as the interests and financial strength of the project developers and investors. Prospective lenders need to target their financial capabilities and terms of specific loan facilities to take such interests into account.

Clean power project developers often face difficulties sourcing debt financing when their projects feature newer generation technologies, sales of project outputs to non-investment grade entities or on a merchant basis, the developer’s own capital strength is limited, or where loan sizes are below thresholds attractive to the major commercial bank lenders. Prospective lenders can devise financing strategies to mitigate or even build on such aspects.

Birch Tree Capital can assist lenders in clean power projects in several respects:

• Crafting lending programs meshing industry sector needs with lender capabilities, strengths, and interests.
• Identify suitable industry sectors and specific lending prospects.
• Evaluate lending prospects on a “fatal-flaw” initial review basis.
• Advise on current loan market conditions, including terms and conditions and loan structures.
• Review production tax credit (“PTC”) loan monetization framework and lending considerations, including relations with developer and third party taxoriented investors.
• Advise on third party tax-oriented and institutional investor considerations regarding debt financing structures.
• Assist in negotiating lender term sheets and full documentation.
• Review of pro forma financial models for adequacy in representing the proposed project.
• Conducting Monte Carlo simulations as part of sensitivity analyses of pro forma financial models.
• Identify, retain, and coordinate other appropriate external technical advisors, e.g., legal counsel, independent engineer, insurance, land, tax valuation.
• Coordinate due diligence review process with the project sponsor and investor’s other advisors.
• Coordinate with investor’s legal counsel on tax matters relating to a project’s Federal and state tax impacts.
• Identify and coordinate with suitable other financing sources.