Panda Power in talks with LPs about options for funds

Panda Power Funds, an energy-focused firm formed in 2010, is in discussions with its fund LPs on the firm’s future, including exploring ways for investors to exit the funds, three people with knowledge of the firm told Buyouts.

What form the liquidity option could take is unclear. One option is a fund restructuring, sources said. One source, a buyer on the secondary market, said the firm has made preliminary inquiries to agents about working on potential restructurings.

Two of the sources said nothing has yet been finalized and discussions are ongoing. Bill Pentak, vice president of investor relations and public affairs, did not return calls for comment.

Panda Power Funds was formed out of independent power company Panda Energy, which was formed in 1982 by Robert Carter. Carter is managing partner, chairman and former CEO of Panda Power Funds.

The CEO title is now held by Todd Carter, the firm’s senior partner and founding president. Other senior executives listed on Panda Power’s website include Panda Energy veterans Ralph Killian, who worked for many years at Panda Energy, including as senior vice president of development of Panda Ethanol; William Nordlund, former general counsel at Panda Energy; and Robert Simmons, chief financial officer at the firm.

Panda raised two private equity funds: Panda Power Generation Infrastructure Fund, which closed on $420 million in 2011; and Panda Power Fund II, which raised at least $535.5 million in 2014, Buyouts reported. How much Fund II closed on is unclear.

Panda Power Generation Infrastructure Fund was producing a -14.52 percent return since inception as of April, according to Indiana Public Retirement System. Fund II was generating an 8.53 percent return as of the same date, according to Indiana.

It’s not clear whether the return tallies reflect the bankruptcy of a Panda Power Funds project, Panda Temple Power, which filed for bankruptcy on April 18, filings show. Panda Temple Power, which sold electricity in Texas’s wholesale market, was affected by falling prices due an oversupply in the market, the company said in bankruptcy filings.

The Temple project is one of five combined-cycle power plants Panda owns in Texas and Pennsylvania. Panda also has projects in development in Virginia, Pennsylvania and Maryland, documents said.

Panda Temple Power’s main asset is Panda Temple I Generating Station, a natural gas-fueled 758-megawatt electric generating facility in Temple, Texas, bankruptcy documents said.

Panda Power invested $375 million of equity into the Temple project, which included $100 million from Panda funds and $275 million from third-party co-investors, bankruptcy documents said. The project, completed in 2014, also included $377 million of secured debt.

In March 2015, the original secured debt was refinanced with $400 million of secured debt, bankruptcy documents said.

Action Item: Check out Panda Temple Power’s bankruptcy filing here: http://bit.ly/2tA2F9u

The sun sets behind power lines above the plains north of Amarillo, Texas, on March 14, 2017. Photo courtesy Reuters/Lucas Jackson