Transaction Negotiations and Commercial Advisory

Case Study: #1 Commercial Advisory

Case Study: #1 Commercial Advisory

Background: Korea South-East Power Co. (“KOSEP”) was considering the acquisition of a greenfield CCGT project in Pennsylvania within the PJM market and hired Korea Ratings (“KR”) to assess the feasibility of the project. On behalf of KOSEP, KR hired Orchid to lead due diligence from on the ground.

Orchid's Role:

  • Orchid oversaw the development of a power market simulation of the PJM market.
  • Engaged a third party legal adviser and managed the legal review.
  • Provided an overview of the US power sector and the PJM market.
  • Provided an overview of the US natural gas market with emphasis on the Marcellus Shale.
  • Reviewed the project gas sourcing plan and provided feedback on options to procure gas.
  • Reviewed the power marketing plan and provided input on hedging and power sales options.
  • Orchid reviewed all contracts, permits and licenses for potential issues.
  • Critical problems were identified by Orchid. Project never constructed due to these issues. Developer eventually went bankrupt.

Orchid's Deliverables:

  • A report on the project covering power sales, gas procurement, regulatory and permitting issues, identifying risks and proposing mitigation
  • The power market simulation output and scenarios
  • Identification of any fatal flaws