Covanta starts drive to raise €450m for Poolbeg waste-to-energy project
Covanta Energy, the US company behind plans for a hugely controversial €450m waste-to-energy plant in Dublin has begun a fundraising drive for the project. It has also confirmed it plans to begin construction this autumn.
Last month, Dublin City Council, which has signed a contract with Covanta that obliges the local authority to supply a minimum amount of waste to the plant each year or face financial penalties, extended a deadline that expired in February for the US firm to raise finance for the project.
It gave Covanta until the end of August to secure the capital required for the 55 megawatt power plant and also told it that construction had to re-start by November 5.
Macquarie Capital has begun trying to drum up interest in what its marketing literature labels 'Project Liath'. It's trying to help Covanta raise as much as €350m via third-party equity and senior and mezzanine debt.
It notes that Covanta also plans to invest between €100m and €150m of its own equity in the project. Covanta has a 51pc stake in the power plant project. Danish firm Dong Energy owns the remainder.
Macquarie has already undertaken preliminary marketing and next month it expects to provide a more detailed information memorandum as well as a financial model to pre-qualified parties. It's hoping to finalise the funding by July, a month ahead of the council's deadline.
Approval for the power plant was secured from An Bord Pleanala in 2007, despite the project having been opposed by then environment minister John Gormley.
A number of other political figures, including former Tanaiste Michael McDowell and current education minister Ruairi Quinn, were among those who lodged objections to the scheme.
Earlier this year, the managing director of the Irish arm of Belgian waste group Indaver, John Ahern, claimed that Covanta was finding it "difficult if not impossible" to raise funds to build the power plant in Poolbeg due to Ireland's sovereign debt risk. Indaver had offered to build the power plant without a clause that would force the council to supply a minimum amount of waste to it. Indaver would also reduce the scale of the facility from handling 600,000 tonnes of waste a year, to 400,000.
Will Ainger, co-editor of industry journal 'SparkSpread', which reported the Covanta fundraising initiative, told the Irish Independent that potential investors were likely to be put at ease by the fact the US firm is willing to inject a large chunk of its own money into it.
He said that potential lenders would probably want to see financing of the power plant comprise of between 65-70pc debt and the remainder in equity.
He said such levels would probably make the deal appeal to lenders, but he questioned whether some international banks would want to increase credit to a project in Ireland.