Ultra Capital and Panamint Capital Achieve $165.9 Million Refinancing of Cottage Grove Cogeneration Facility

Financial Milestone: $165.9 Million Refinancing for Cottage Grove Cogeneration

On May 2, 2025, LSP-Cottage Grove, L.P. marked a significant achievement by successfully closing a $165.9 million refinancing deal for the Cottage Grove Cogeneration facility. This facility, which boasts a capacity of 265 megawatts (MW), employs a combined-cycle gas turbine (CCGT) system and is strategically located in the MISO Zone 1, providing crucial energy support.

Overview of the Refinancing Deal

The refinancing was executed through the issuance of $125.9 million in senior secured notes, supplemented by a $40 million letter of credit facility. The arrangement is particularly noteworthy given that it is underpinned by a newly established 15-year tolling agreement with a prominent regional cooperative utility. This long-term contract significantly strengthens the financial and operational stability of the facility.

A Hub of Energy Reliability

Cottage Grove Cogeneration stands out not only for its capacity but also for its impeccable safety record, having achieved an impressive milestone of 10,000 days with no lost time incidents. Furthermore, the dual-fuel capabilities of the facility enable it to provide continuous energy supply during periods of urgency while simultaneously supporting major industrial operations, including a significant North American chemical and manufacturing company.

To further enhance its reliability, Cottage Grove’s affiliate, Cottage Grove Storage, is advancing the development of an 80 MW / 320 MWh energy storage project on site. This initiative is set to bolster the facility's ability to respond to fluctuations in energy demand and contribute to grid stability.

Strategic Partnerships

The refinancing was facilitated by key industry players, including Global Infrastructure Partners (GIP), part of BlackRock, and PGIM Private Capital, who acquired the notes. Mizuho acted as the issuing bank for the letter of credit. Legal frameworks were secured by White & Case LLP for the issuer and Morgan Lewis & Bockius LLP for the purchasers and the letter of credit issuer. This network of stakeholders showcases the collaborative effort in managing and securing funding for pivotal energy assets.

Kristian Hanelt, a partner at Ultra Capital stated, "We are pleased to have closed this financing with GIP, PGIM Private Capital, and Mizuho, emphasizing Cottage Grove's essential role in the energy landscape of the region. This recapitalization, made possible by our long-term contract with a high-quality counterparty, validates our investment thesis laid out in 2021."

Apolka Totth, Chief Executive Officer of Panamint Capital, expressed that the results of the transaction reflect their commitment to delivering high-quality outcomes, stating that their team transformed Cottage Grove from an underinvested asset into a facility rated at investment-grade status with exemplary operational standards. He added, "We are excited to deepen our relationship with key stakeholders and are looking forward to managing Cottage Grove as it enters a new phase of success and facility expansion."

Future of Cottage Grove Cogeneration

The focus on long-term, contracted revenues aligns with GIP's investment strategies in stable, high-quality infrastructure debt investments benefiting the broader regional grid. With Cottage Grove at the forefront of energy provision, Stuart Murray, Fund Partner at GIP proclaimed, "We are pleased to participate in financing an asset critical to regional grid reliability."

The collaboration with PGIM Private Capital further solidifies the commitment to financing infrastructure backed by stable contracts, as stated by Ingrida Soldatova, Senior Principal at PGIM. Mizuho’s involvement as a facilitator of institutional private placements and providing crucial credit facilities illustrates the comprehensive approach to supporting infrastructure financing in today's economy.

Conclusion

As Ultra Capital and Panamint Capital step forward on this vital refinancing, it not only sets a precedent for similar endeavors in the energy sector but also highlights the importance of strategic partnerships in realizing energy infrastructure projects. As Cottage Grove Cogeneration prepares for its next chapter, there is a clear message – a commitment to reliability, improvement, and unwavering support for future energy demands.