Milbank Advises Lenders in $4.3 Billion Indonesia Power-Generation Project

Reflecting the strength of its large-scale project finance and energy work in Asia, Milbank, Tweed, Hadley & McCloy LLP has advised Japan Bank for International Cooperation (JBIC), The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) (as Documentation Bank) and 8 commercial lenders on the development and financing of a US $4.3 billion 2,000-megawatt coal-powered electricity generation plant in Central Java, which on completion will be one of the largest IPP’s in Asia.

A historic project, the Central Java facility is the first to be delivered under Indonesia’s public-private partnership (PPP) regime, and the first to benefit from a joint guarantee from the Indonesia Infrastructure Guarantee Fund (IIGF) and the Government of Indonesia, acting through the Ministry of Finance. The Central Java Project will be developed using high-efficiency technology, and once operational, will deliver electricity to Indonesia’s government-owned power company, PT PLN (Persero), for 25 years pursuant to a power purchase agreement. It is also the first such project to achieve financial close following the introduction of new currency regulations which have attracted significant attention from international investors.

In addition to JBIC and BTMU, Milbank represented Mizuho Bank, Sumitomo Mitsubishi Banking Corp., DBS Bank, Oversea-Chinese Banking Corp. Ltd., Sumitomo Mitsui Trust Bank (Singapore Branch), Mitsubishi UFJ Trust and Banking Corp. (Singapore branch), Shinsei Bank, and The Norinchukin Bank.

PT Adaro Energy Tbk., Itochu Corporation and The Electric Power Development Co., Ltd. (J-Power) established the project company, PT Bhimasena Power Indonesia (BPI). JBIC also supplied a political risk guarantee for the debt portion provided by the senior commercial lenders. Subordinated guaranteed equity bridge loans will also be used by BPI.

Singapore-based Project Finance partner James Murray, who led the Milbank team said: “Milbank is honored to have advised such an outstanding group of lenders, including leading export credit agency Japan Bank for International Cooperation, on this ground-breaking project sponsored by highly regarded sponsors. The interest and support of the banking community in the project, which uses ultra-supercritical technology, suggests a strong future for power project financings in Indonesia.”

In addition to Mr. Murray, Milbank lawyers on the Central Java transaction included senior lawyer James Orme, working with associates Rosaline Yusman, Andrew Gibb and Martin Wong. Additional team members providing support included Project Finance partners Young Joon Kim and Alec Borisoff; special counsel Daniel Lin and Melissa Lewis; associates Kristina Hokenberg, John Inglis, and Brian Youn.

The Central Java financing adds to Milbank’s well-established prominence in Indonesia. The firm was named Indonesia International Law Firm of the Year by Chambers Asia-Pacific in 2015 and 2013. In recent transactions, the firm advised international lenders in the $775 million acquisition of Indonesia’s Martabe gold mine, one of the world’s largest; represented secured international parties in the $650 million multi-year restructuring of oil/gas and liquid cargo shipper BLT; and advised a syndicate of international lenders behind a $1.75 billion loan to the Indonesian state-owned oil and gas company Pertamina, one of the Southeast Asia’s largest crude oil producers.

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