Atlantic II

inactive

Lagoa do Barro wind power project (the “Project” or “LdB”) will add 195 MW of renewable energy to the Brazilian electricity system, thus directly supporting the Government of Brazil’s (“GoB”) priorities to ensure a stable long-term electricity supply and the diversification of its energy matrix with the expected addition of around 10 GW from renewable sources by 2018. The Project consists of the construction of 8 adjacent wind farms totaling 195 MW and its associated facilities in the state Piauí, located in the Northeast of Brazil.The 8 wind farms of the LdB cluster had their energy contracted in the Leilão de Energia Proveniente de Novos Empreendimentos de Geração (New Energy Auction or “LEN”) auction A-5 of 2014. The Project will benefit from a 20-year R$ denominated power purchase agreement (“PPA”) at fixed average price of around R$139.9/MWh (~US$55.3/MWh) as of November 2014, indexed to inflation (IPCA), signed with the system distribution companies (“DisCos”). The DisCos pay the generation companies through the Chamber of Electricity Energy Commercialization (Câmara de Comercialização de Energia Elétrica or “CCEE”- Electricity Clearing House) which is the institution that intermediates the energy contracts between the DisCos and the generation companies. Electrical studies were presented to the relevant authorities, which provided a favorable opinion to the Project´s interconnection specifications for the assigned node. The Borrower is expected to enter into turn-key EPC contracts covering civil works, equipment and turbines from first-tier manufacturers and a long-term O&M contract for at least the life of the IDB Group loan. The Project has an estimated [18]-month construction period, with construction starting by the first semester of 2017. Wind resource has been assessed by Aeroespacial and Inova Energy based on a four year on-site wind measurements at 120m hub height. The Project has a capacity factor of over 50% and estimated annual energy production at P90 of 997 GWh/year, with expected 5,107 equivalent hours.Transaction Structure and Financing Highlights.The estimated total cost of the Project is of up to R$1.3 billion, which will be financed through (a) an IDB Group Partial Guarantee for the senior loan until financial completion and/or (b) an IDB Group Guarantee for the debentures to improve their risk profile and pricing or (c) a long-term loan with a 15-year door-to-door tenor and a grace period of up to [36] months. It is estimated that the IDBG participation will amount of up to R$430 million. The financial plan will be completed with the participation of one local development institution, as well as equity contributions for around 70/30 debt-to-equity ratio. The Project will be required to meet the customary debt sizing criteria applied to wind projects, DSCR 1.30x for P9010-years and 1.00x for P991-year. The IDBG Guarantee is expected to have a tenor of up to 12 years. The project will have the security package customary for this type of project finance transactions.Development Impact.The Project will have positive developmental impacts, such as: (i) adding 195 MW of renewable capacity to the Brazilian grid and thus decreasing thermal and hydro generation reliance; (ii) reducing carbon emissions; (iii) assisting a growing private-sector company in the Brazilian power sector, positioned to promote the much needed consolidation of the market segment related to small and medium-sized renewable energy projects; and (iv) improving the sites’ local infrastructure and increasing local income.