Ontario Power Generation Inc (OPG) has announced the financial close of a two-tranche, $475M private placement bond that will fund the re-development and expansion of four hydroelectric generating stations on the lower part of the Mattagami river in northeastern Ontario, Canada.

The Lower Mattagami Energy Limited Partnership (“LMELP”) is a limited partnership between OPG, as the sole general partner, and LM Energy Inc., a wholly-owned subsidiary of OPG. LMELP reached financial close of a $225M private placement issue of senior secured bonds at a fixed 4.331% annual interest rate, and a $250M issue at a fixed 5.139% annual interest rate.

As part of the re-development and expansion one additional generating unit will be added to three existing stations – Little Long, Harmon and Kipling. The fourth station – Smoky Falls – will be decommissioned and replaced by a new, three-unit, 267MW generating station. The expanded Lower Mattagami River Complex is expected to be in-service by June 2015, with a total generating capacity of 924MW, an increase of 438MW.

The re-development and expansion is on schedule. Construction began in June 2010. About 560 workers are currently employed and cofferdams have been completed at Little Long and Smoky Falls. Preparations are underway for similar construction activities at Harmon and Kipling sites.

The bonds received a long-term credit rating of ‘A (high)’ by Dominion Bond Rating Service and ‘A2’ by Moody’s. The re-development and expansion is supported by a long-term Hydroelectric Energy Supply Agreement with the Ontario Power Authority.