Leaseback Transaction a First

Fortnightly Magazine - May 15 1996
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Old Dominion Electric Co-op. (ODEC) has entered into a leaseback financing transaction with First Union National Bank that could save its 12 member systems about $4 million per year. First Union leased Unit One of the Clover Power Station from ODEC for 22 years with an upfront cash payment of $47.5 million, then leased it back to ODEC. Half the payment, $23.6 million, was used to reduce ODEC's long-term debt obligations; the balance was used for a debt swap that replaced $23.9 million in bonds paying an interest rate of 8.76 percent with new bonds paying a reduced interest rate of

7.06 percent.According to ODEC vice president Daniel Walker: "Previously, this type of transaction had typically been done with jet airplanes. This is the first time this type of transaction has been used for a power plant." t

Recharge the Economy with Renewable Energy Tax Credits

Lori A. Burkhart is an associate legal editor of PUBLIC UTILITIES FORTNIGHTLY.


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