$27 million loan guarantee for Alberta First Nation to aid in infrastructure ownership efforts
The Alberta Indigenous Opportunities Corporation (AIOC) has provided Frog Lake First Nation (Frog Lake) with a $27 million loan guarantee to support stable, long-term ownership of the Lindbergh cogeneration facility at Strathcona Resource Ltd.'s (Strathcona) Lindbergh Steam-Assisted Gravity Drainage operation. AIOC's loan guarantee preserves the on-going business partnership between Frog Lake and Strathcona, avoiding any divestment of Frog Lake's 100 per cent ownership stake and provides them with long-term cost of debt certainty.
Frog Lake initially financed its acquisition of the Lindbergh cogeneration facility with self-funded equity and bank debt that matured on April 1, 2021, with an agreement to lease the facility back to Strathcona on a fixed-rate deal that generates monthly cash flows for Frog Lake. With the debt approaching its maturity and Frog Lake faced with diminished access to capital and a strong likelihood of unfavorable refinancing terms, Frog Lake was forced to reexamine its ownership stake. With the AIOC's 15-year loan guarantee, Frog Lake is able to retain its ownership stake and secure steady cash flows for the duration of the loan.
"This project is an example of the Alberta Indigenous Opportunities Corporation's commitment to driving and preserving Indigenous investment in Alberta's natural resource sectors," says Alicia Dubois, CEO, AIOC. "AIOC is proud to support long-term Indigenous ownership in natural resource projects and in turn, bolster economic prosperity in Indigenous communities across the province."
Frog Lake will retain $6.7 million of unlevered equity capital invested in the Lindbergh facility, sharing the equity risk with AIOC.