Shenyang, China, May 3, 2011 — A-Power Energy Generation Systems, Ltd. announced that Shenyang Power Group Co. signed a letter of intent with China Machinery Engineering Corp. on April 15 involving the development of a proposed 615 MW wind power generation project in Texas.
The aim of this planned arrangement between the parties is to assist SPG in securing from Chinese sources about 14 percent of the debt financing that is anticipated to be required to develop the project, as well as to find a suitable engineering, procurement and construction contractor for the Texas Wind Farm.
The LOI calls for SPG to appoint CMEC as the EPC contractor for the Texas Wind Farm project and for CMEC to assist SPG in obtaining about $260 million in debt financing from banks and other financing agencies in China for Spinning Star Energy, the project company that was founded to own, develop and operate the Texas Wind Farm. As the EPC contractor, CMEC would be expected to procure equipment from suppliers designated by SPG.
The parties expect to have further discussions and negotiations regarding the details of the arrangements covered by the LOI and to prepare and finalize the multiple agreements that will be required to create binding obligations between the parties during the course of May 2011.
Notwithstanding any efforts that are made by the parties pursuant to the LOI or any final agreements that may be reached pursuant to the LOI, no assurances can be made that SPG will be able to secure any debt financing for the Texas Wind Farm project.
SPG was incorporated in May 2009 in China as an industrial construction company specializing in electricity generation projects and manufacturing of power equipment.
A-Power initially had contributed 62 percent of SPG's registered capital of RMB 1.0 billion, with the remaining capital contributed by other non-related entities that are active in the electricity generation industry. In October 2010, A-Power sold 42.5 percent of its ownership in SPG, reducing A-Power's ownership in SPG from 62 percent to 19.5 percent.
Spinning Star is the joint venture enterprise owned by United States Renewable Energy Group Wind Partners I, LLC and SPG that was founded to develop and operate a wind power generation project of about 615 MW of capacity in west Texas.
This wind project is currently under development and requires additional external financing for completion. The availability of the financing required to develop the Texas Wind Farm project is not assured.