Tri-County Electric Co-op, Inc. Case Study

Case Study
Tri-County Electric Co-op, Inc.

CC Capital Advisors helped a long-standing electric cooperative client achieve their unique objectives by securing a flexible financing package.

Situation

Tri-County Electric Co-op, Inc., located in Aledo, Texas, faced a significant financial obligation due to Winter Storm Uri, which hit Texas in February 2021. The storm threw several power generation plants offline, causing a massive multiday power grid shutdown. The cost of energy spiked. In the wake of the disaster, TCEC’s power provider—Waco, Texas-based Brazos Electric Power Cooperative, which provides generation and transmission (G&T) services to Tri-County and 15 other cooperatives—filed for bankruptcy, leaving TCEC to satisfy its portion of the liability, which was initially estimated to be more than $500 million. TCEC approached CC Capital Advisors (CCCA), an investment banking partner and resource for the electric cooperative industry for nearly 30 years, to help secure the funds necessary to satisfy its obligation.

Approach

CCCA worked closely with TCEC’s management team and board to understand their objectives and priorities. The chief priorities were achieving maximum financial flexibility for TCEC while minimizing the financial impact on TCEC’s members. CCCA engaged in candid conversations with TCEC to understand growth demands and other unique operational expectations and then developed multiple financing options. CCCA and TCEC held preliminary discussions with CoBank, one of the largest private providers of credit to the U.S. rural economy, eventually selecting it as the optimal financing partner. CoBank was able to offer TCEC a flexible package with favorable terms and conditions to satisfy TCEC’s Storm Uri obligation of approximately $478 million, plus an additional $100 million in financing to facilitate TCEC’s planned growth.

Results

Within 18 months, CCCA was able to guide TCEC to a soft landing with a financing source and structure that satisfied the Co-op’s unique needs, granting TCEC maximum financial flexibility as well as additional funds to facilitate TCEC’s tremendous growth. It also met TCEC’s objective to minimize the impact on its members. The financing package was well-received by TCEC’s board and management team and put TCEC in control compared to other options that were considered. CCCA’s expertise and ability to work closely with TCEC’s team were critical in achieving a positive outcome for the Co-op and its members during a challenging time.

Insight

Overall, this case study illustrates the importance of having an advisor with the expertise, relationships and experience to successfully guide companies through a challenging capital raising process. By understanding our client’s objectives, being upfront about expectations, and having relationships with numerous financing partners, CC Capital Advisors can help clients navigate challenging situations and guide them toward their goal of achieving a favorable outcome.

CC Capital Advisors, Inc. Member FINRA, SIPC