Emily Darby

White & Case LLP in New York and Miami and Brazilian firm Machado Meyer Advogados have helped the renewables arm of British private equity group Actis obtain a US$67 million loan to build solar plants in northeastern Brazil and seal a power purchase agreement (PPA) with US company Dow Chemicals.

Allen & Overy LLP in New York and Brazil’s Dias Carneiro Advogados advised IDB Invest and Norwegian finance group DNB Bank as lenders in the deal. A separate Allen & Overy team advised Citibank as collateral agent for the transaction.

The same teams of White & Case and Machado Meyer helped the borrower, Atlas Renewables, sign a 15-year PPA with Dow Chemicals. The US company turned to Mayer Brown LLP in New York and Tauil & Chequer Advogados in association with Mayer Brown in São Paulo.

Through the PPA, Atlas Renewables will supply clean energy from the photovoltaic facility to four of Dow Chemicals' production sites in Brazil, including its largest facility in the country.  

The US$67 million transaction is understood to be among the first financings for a Brazilian solar project made solely in US dollars. The loan has a term of 15 years – the same length as the PPA.   

The deal closed on 26 October.

The loan comes in several tranches. IDB Invest provided US$28 million from its own resources, while Norway’s DNB Bank contributed US$24 million through an unfunded participation risk agreement – a type of staggered financing instrument that allows the Norwegian bank to defer the loan payment to a later date and which protects the lender from borrower default. IDB put up a further US$7.5 million through its Canadian Climate Fund, which is aimed at supporting climate-friendly projects in Latin America, while World Bank-operated environmental fund, the Clean Technology Fund, provided the same amount.

Atlas will use the loan to develop, build and maintain four solar parks, which will have an installed combined capacity of 187 megawatts. The renewables site, known as the Jacaranda project, is based near the city of Juazeiro do Norte in the northeastern state of Bahia. Once complete, the site will have the capacity to supply power the homes of some 750,000 residents. The solar plants will operate with bifacial technology designed to absorb energy more efficiently and produce cleaner energy.

Through the participation of the two climate funds, the project has also set out targets to improve gender and racial diversity among the workforce at the site. IDB Invest has pledged that at least 10% of the construction workforce will be made up of women, while the bank will also employ an undisclosed percentage of afro-descendant workers to the site.

IDB Invest has backed several projects in Latin America recently. In October, it provided a US$37 million loan to Brazilian hospital organisation Sociedade Beneficente Israelita Hospital Brasileira Albert Einstein for costs related to the covid-19 pandemic, while it granted a US$60 million loan to Banco America Central to support women-led small and medium-sized enterprises in El Salvador the month prior.

For the financing

Counsel to Atlas Renewable Energy

  • White & Case LLP: Partner Thomas Pate in New York, and associates Chris Bergan, Helena Buitrago and Camille Mendoza in Miami

Counsel to IDB Invest and DNB Bank

  • In-house counsel to IDB Invest - Patricia Alves de Toledo
  • Allen & Overy LLP: Partner Sami Mir and associates Jake Reed and Nicole Ubal in Washington, DC; senior counsel Andre Teixeira in São Paulo; senior counsel Simon Hayes and associate Krystyna Lopez in New York
  • Dias Carneiro Advogados: Partners Thiago Flores, Gustavo Junqueira and Paulo Leme, and associates Pedro Araujo, Arthur Fontoura and Rodrigo Murussi in São Paulo

Counsel to Citibank

  • Allen & Overy LLP: Partners Joe Stefano and Dorina Yessios, and senior counsel Christine Steenman in New York

For the PPA

Counsel to Atlas Renewable Energy

  • White & Case LLP: Partner Thomas Pate in New York, and associates Chris Bergan, Helena Buitrago and Camille Mendoza in Miami

Counsel to Dow Chemicals

  • Mayer Brown LLP: Partner George Miller in New York
  • Tauil & Chequer Advogados in association with Mayer Brown: Partners Daniel Gunzburger, Débora Yanasse and Luis Montes in São Paulo

(Latin Lawyer - 01.12.2020)