The deal is a sign of the resurgence of the Asia Pacific project finance market and overseas acquisitions by Japanese utilities and trading companies

Allen & Overy today said it has advised Japan Bank for International Cooperation (JBIC) and Mandated Lead Arrangers The Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU), Mizuho Corporate Bank Ltd. (Mizuho) and Sumitomo Mitsui Banking Corporation (SMBC) on the acquisition financing of five gas-fired power stations, a 54 kilometre gas pipeline and associated companies in Mexico, all subsidiaries of Mitsui & Co., Ltd. and Tokyo Gas Co., Ltd.

The power stations have an aggregate generating capacity of 2,233 MW and are contracted by the Mexican federal electricity commission, Comisión Federal de Electricidad (or CFE), whose right to approve certain aspects of the transaction was a key driver behind the innovative and complex structure of the transaction. The structure combines aspects of limited recourse financing to each operating company with the benefit of portfolio financing. If problems arise with one operating company, action can only be taken with respect to that company, with no cross-collateralisation. A failure to pay by the parent company that is associated with one of the operating companies does not cause a default at parent level, but rather a mandatory prepayment scheme that works on a pay-as-you-can basis.

Aled Davies, banking partner who led the deal, commented: "This was an extremely complex and novel financing structure. It sought to preserve the commercial benefits of lending to a group of companies operating power stations and a pipeline under long term contracts with CFE, the Mexican state power utility, and to ensure a problem relating to one project company in the group would not spread to impact on the others.."

The Allen & Overy team was led by the Managing Partner in Tokyo, Aled Davies, and senior associate Scott Neilson together with partner Ashley Young, counsel Aaron Comerford, senior associates Justen Fleming and Katie Compson, associates Tony Lui, Scott Lovell and Jacqueline Zheng, legal advisor Simon Freitag and trainee Duncan Moran in Tokyo. They were supported by associates Dennise Calderon-Barrera, Nazish Ansari and law clerk Rebecca Stubbs in New York, partner Juan Barona, senior associate Jimena Urretavizcaya and associate Jose Manuel Revuelta in Madrid and partner Christophe Jacquemin and associate Igor Kukhta in Paris.

Local counsel for the Lenders in Mexico was Ritch Mueller.

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