Investment Description and History
The Oaklands Hill Wind Farm is a 67 MW capacity wind farm that is located in Glenthompson, Victoria, Australia. Oaklands Hill consists of 32 x 2.1MW Suzlon S88 V3A wind turbines and is connected to Powercor’s distribution network.
The asset is underpinned by a whole of life (25 year) take or pay off-take agreement with AGL Hydro. AGL Hydro provides O&M services to Oaklands Hill under a 25 year fixed price Asset Management Deed (AMD). Under the off-take agreement, AGL Hydro take all electricity and renewable certificate output (and pricing risk). AGL Energy (BBB rated), one of the leading energy companies in Australia provides a parent company guarantee for AGL Hydro’s obligations.
Whitehelm (through the Challenger Life Company) acquired 100% of Oaklands Hill in June 2011 with the wind farm commencing operations in December 2011. As part of the acquisition, approximately $200m of external debt and interest rate hedges through three separate credit counterparties under a tight transaction timeline.
Oaklands Hill is a fully contracted wind farm thus providing significant protection to debt and equity providers. The asset is subject to a 25 year offtake agreement with AGL. Under this agreement, AGL takes all electricity and price risks. The investment is also largely protected from wind risk with 100% of revenues being fixed for the first 5 years followed by a cap and collar arrangement for the last 20 years. O&M is fully contracted with AGL at a fixed price over the 25 year life of the asset.
Whitehelm Capital staff negotiated the key commercial terms and legal documents of the transaction with AGL as well as raising approximately $200m of debt capital with three separate credit counterparties. Since acquisition, Whitehelm has undertaken a key role in the overall monitoring of the company including both its ongoing operations and capital structure requirements.