Luannan Coal-Fired Power Plant

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Panda Global Energy Company has a concession for the construction of a 100-MW (2x50-MW) coal-fired cogeneration power plant in Luannan County, near Beijing. Panda Global Energy Company is a subsidiary of Panda Energy International Inc. The company has agreed to complete construction of the plant by April, 1999. The facility will employ approximately 200 employees when completed. Harbin Power has the turnkey contract and Panda Energy International has a 20 year power purchase agreement with North China Power Company, the local power company also responsible for the construction of transmission lines. Moody's, S&P and Duff & Phelps assigned low credit ratings for the project (B-, B- and B, respectively) due to various risks including construction risk, aggressive financing structure, lack of state approvals, and low project debt service coverage rates. At the same time, high demand for energy generation in China and significant support at the Hebei provincial government and Tangshan municipal government levels enabled Panda Energy International to raise financing through senior secured bonds of 7 years maturity (due 2004), with semiannual 12.5% coupon payments. Panda Energy International diversified some cash flow from its two US projects. None None