The refinancing comes as part of an ongoing review of the structure of New Earth.
A funding update revealed that New Earth is working with Ernst & Young to explore the sale of a number of its ‘non-core’ assets. But, it is claimed that a sale could take several months due to the ‘complexity’ of the waste business and the need for extensive discussions with key stakeholders, including local authorities.
New Earth is also seeking to secure extensions to its existing long-term local authority contracts, which are said to be the ‘cornerstone’ of any future financing arrangements. Extensions to its Bournemouth and Dorset contracts to 2021 have already been secured.
Finance
Project equity was used to develop the £60 million, 120,000 tonnes-per-year capacity Avonmouth gasification and pyrolysis facility during construction, and the Macquarie money means that the plant has been refinanced in the post commissioning phase.
It is not known how much New Earth has borrowed to refinance the plant, but it is understood that the debt facility with Macquarie has been fully drawn. New Earth undertook a stringent performance test before it was deemed suitable for the financial package.
All six plants operated by New Earth now include bank finance, allowing the company to build ‘new infrastructure’ and trial new technology through a period of ‘general constriction’ in the availability of bank debt.
Plan
Speaking to letsrecycle.com, external affairs director Robert Asquith said it had always been New Earth’s intention to introduce bank debt.
He said: “We are dealing with new technology that hasn’t been deployed on this scale at all before. In 2009/10 we were facing a nuclear winter for conventional project debt. And, because the project has gone well, we are now able to re-finance with conventional bank funding.”
New Earth officially took over phase one operations at the Avonmouth facility in September 2013. It treats waste on behalf of the West of England waste partnership, Bath, North East Somerset and South Gloucestershire councils, as well as Blaenau Gwent and Torfaen (see letsrecycle.com story).
NEAT
The plant was designed, built and commissioned by the NEAT Technology Group, which was demerged from New Earth in 2013. Avonmouth has seen the first commercial deployment of the NEAT patented pyrolysis technology.
The neighbouring New Earth MBT plant processes around 120,800 tonnes of material for the West of England Partnership which is worth £100 million over nine years and the material is largely sent as RDF to the Avonmouth facility.
At present the plant has 16 modules in operation and is generating between 9-10 MW of electricity – short of the 12MW projected for full capacity.
Darren Stockley, Managing Director of New Earth said: “All our six operational plants now include bank finance. For two we used “conventional” project finance through the construction stage, but the others, which include the Avonmouth ERF, we re-financed post commissioning.
“By this means we have been able to build new infrastructure quickly using novel processes through a period of general constriction in the availability of bank debt. We expect now to be able to fund our next development projects for which planning permissions, waste contracts, and land have been lined up. ”
Mark Scobie, Chief Executive of New Earth and NTGL added: “The ERF passed strict technical and operating tests prior to the refinancing. We believe that this demonstrates the potential of our NEAT pyrolysis and gasification process as a game changer in the waste management and resource recovery space. ”
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