The Theun Hinboun project may have survived the Asian financial crisis intact, but little could have prepared project sponsors Electricite de Laos (EdL), GMS Power (formerly MDX Lao Co) and Norway's Statkraft for the events of September 2008.
As the international debt markets ground to a halt in October in the wake of Lehman Brothers' record bankruptcy filing, Theun Hinboun was racing against time to seal financing that would allow it to start work on a major expansion at the beginning of the dry season.
Set in landlocked Laos across two tributaries of the Mekong river, the hydroelectric power facility was on track to raise almost $600 million to expand its generating capacity from 210MW to 500MW when the funding crisis reached its peak.
Choked by spiralling funding costs, a group of international lenders withdrew, leaving the US dollar portion of the deal short and throwing the financing in doubt at the eleventh hour. Hasty negotiations followed before the deal was eventually signed on October 8 in the ballroom of the Conrad Hotel in Bangkok, with an enlarged Thai baht facility making up the shortfall.
"By the time we had negotiated a satisfactory construction contract, the excellent financing package we were working on began slipping through our fingers," said David Michaels, managing director of co-sponsor...
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