Shearman & Sterling continues its representation of Kallpa Generación S.A., in Lima, Peru, with the steam turbine expansion of Kallpa's power plants. Such expansion is expected to bring Kallpa’s total capacity to 840 MW and will not impact its consumption of Camisea natural gas supply nor its usage of the natural gas pipeline transportation capacity because it will use waste heat from its existing gas turbines for conversion to electricity and, therefore, ease the Lima area’s low electricity reserve margins.

Despite the credit market crunch and based on the strength of the project’s economic and market fundamentals, Kallpa was able to raise both bank and bond debt without even having fully contracted off-take. The term loan was a senior secured credit facility under which Bank of Nova Scotia as lead arranger and the other term lenders committed up to US$130 million. Kallpa concurrently placed bonds in an aggregate principal amount of up to US$179 million in the Peruvian market. Together, the bank and bond financing will provide 70 percent of the costs of the Kallpa expansion. Posco of Korea, which has become extremely active in Latin America, will build the expansion on a turnkey EPC basis.

The Shearman & Sterling team was led by partner Howard Steinberg (New York-Project Development & Finance) and included partner Jeanne Olivier (New York-Project Development & Finance) and associates John Vigman (New York-Project Development & Finance) and Fernando Garrido (New York-Project Development & Finance).