Project: Tri Energy
Date: July 1998
Amount: $449 million
Arrangers: Bank of Tokyo Mitsubishi, Bayerische Landesbank, Credit Suisse First Boston, DKB Asia, Fuji Bank, Sanwa Bank, Sumitomo Bank, Citibank, NationsBank
Tri Energy, a project to build a gas-powered electricity plant in Thailand, came close to being the worst project financing of 1997. The deal, as originally agreed with the Thai authorities, would have involved raising funds in dollars to build the plant and receiving payments from the Electricity Generating Authority of Thailand (Egat) in Thai baht. Fortunately for the lenders involved, the Thai currency devaluation came before the deal was completed. Fortunately for the future of the project finance market, the trend towards lenders accepting such a currency mismatch was killed stone dead—for now at least.
Before it could be signed, the project had to be considerably renegotiated. The consortium of sponsors was restructured—it now consists of US energy companies Texaco, Edison Mission Energy (with stakes of 37.5% and 25% respectively) and Thai company Banpu Gas Power (with a 37.5% stake). Two new banks were brought in, Citibank and NationsBank. And, crucially, the Thai authorities were persuaded to accept a new payment structure: the amounts Egat would pay the project would still be in baht, but they would be indexed to compensate for any future currency devaluation.