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Acquisitions
6 Months Ended
Jun. 30, 2013
Business Combinations [Abstract]  
ACQUISITIONS
ACQUISITIONS
Campo Verde Solar, LLC
On April 23, 2013, Southern Power and Turner Renewable Energy, LLC, through Southern Turner Renewable Energy, LLC (STR), acquired all of the outstanding membership interests of Campo Verde Solar, LLC (Campo Verde) from First Solar, Inc., the developer of the project. Campo Verde is constructing an approximately 139-MW solar photovoltaic facility in Southern California. The solar facility is expected to begin commercial operation in the fourth quarter 2013. The output of the plant is contracted under a 20-year PPA with San Diego Gas & Electric Company, a subsidiary of Sempra Energy, which is expected to begin in the fourth quarter 2013. The acquisition is in accordance with Southern Power's overall growth strategy.
Southern Power's acquisition of Campo Verde included cash consideration of $136.6 million, of which $111.6 million was paid at closing and $25.0 million will be paid upon achievement of certain milestones. The allocation of the purchase price to individual assets has not been finalized. Under an engineering, procurement, and construction agreement (Construction Agreement), an additional $353 million to $363 million will be paid to a subsidiary of First Solar, Inc. (Construction Contractor) to complete construction of the solar facility.
In the event certain unforeseeable conditions occur at the project site, the Construction Contractor may terminate the Construction Agreement, and in the event the Construction Contractor does not achieve certain construction or project development milestones by certain dates, STR may terminate the Construction Agreement. In each case, a subsidiary of First Solar will be required to make a termination payment to STR equal to STR's investment in Campo Verde (net of any tax or other benefits received by STR) and STR will be required to transfer its ownership in Campo Verde to the subsidiary of First Solar (Termination Payment and Transfer). In addition, under the acquisition agreement, a subsidiary of First Solar may require the Termination Payment and Transfer to occur in the event costs relating to certain contingencies exceed a certain threshold until such time that the contingencies are satisfactorily resolved under the terms of the acquisition agreement, and STR may require the Termination Payment and Transfer to occur in the event certain contingencies are not satisfactorily resolved. The ultimate outcome of this matter cannot be determined at this time; however, STR believes the likelihood of a Termination Payment and Transfer to be remote at the acquisition date.