MILBANK ADVISES LENDER SYNDICATE IN $1.1 BILLION GAS PIPELINE PROJECTS

Pair of pipelines to carry natural gas from southwest Texas hub to U.S./Mexico border facilities

Milbank, Tweed, Hadley & McCloy LLP has advised an international bank syndicate in the more than $1.1 billion limited recourse project financing for a pair of natural gas pipelines that will run from a hub in southwest Texas to locations on the US/Mexico border.

The financing comprises two greenfield projects through two separate financings that have closed and funded concurrently: an approximately $508 million pipeline running 195 miles to San Elizario, Texas, near El Paso; and an approximately $647 million pipeline that will run 148 miles to Presidio, Texas, on the Rio Grande River about 180 miles southeast of San Elizario. The 42-inch pipelines will both originate at the Waha energy storage and transit hub west of Odessa, Texas.

The borrower/developer is a consortium consisting of Mexico’s Carso Energy SA de CV, Energy Transfer Partners LP of Texas, and MasTec Inc. of Florida, and gas will be sold via offtake agreements with the Mexican state-owned electric utility, Comisión Federal de Electricidad (CFE).

Global Project Finance partners Dan Bartfeld and Daniel Michalchuk led the Milbank team on behalf of the lenders, including The Bank of Tokyo Mitsubishi / MUFG, Sumitomo Mitsui Banking Corp. (SMBC), BBVA Bancomer and Mizuho Bank Ltd.

Mr. Michalchuk said, “US natural gas supplies make it a natural provider for Mexico’s electrical utility, which needs reliable sources to fuel its growth. Milbank is happy to play a role in helping facilitate financing for projects that are mutually beneficial to neighbors on either side of the Rio Grande.”

Mr. Bartfeld added “We are very pleased to work again on a major energy financing that highlights the growth in the US and Mexican energy sectors.  We are involved in many of these pipeline and gas-related projects on both sides of the border, and we expect to see many more in the coming years.”

Mr. Bartfeld and Mr. Michalchuk were assisted in the transaction by Global Project Finance associates Caroline Conway, Sean O’Neill and Carolyn Miller.