Date: May 29, 2008
Source: News Room
Environmental Power Announces Approval of $65 Million Debt Allocation for Riverdale and Hanford RNG ® Projects in California
Company has also obtained required permits for Bar 20 Project and has submitted application for debt allocation
Environmental Power Corporation (NASDAQ: EPG), today announced that its subsidiary Microgy Inc., has received an allocation from the California Debt Limit Allocation Committee (CDLAC) for $65.35 million to support the financing of the announced Riverdale Cluster and Hanford Cluster renewable natural gas (RNG ® ) projects.
The allocation reflects an increase in projected RNG ® production of 17% for the combined projects over previous announcements, based on the latest design parameters that were included in the application. The Riverdale Cluster in Fresno County consists of anaerobic digesters at three adjacent dairies with a revised expected output of 621,000 MMBtu/year of RNG ® . The Hanford Cluster in Kings County consists of three dairies with a revised expected output of 732,000 MMBtu/year of RNG ® . Marketing of tax exempt bonds will commence shortly with closing expected in the 3 rd Quarter of 2008 to support the previously announced construction schedule.
The allocation amount includes funding for capitalized interest, debt service reserve funds and financing costs. Estimated capital costs for the projects also include additional expenditures required for hub and spoke type projects where digesters are distributed over multiple farms and raw biogas is transported to a centralized gas conditioning system as well as contingencies for potential capital investments which could reduce operating costs over the respective project's life cycle.
In addition, the required air, water and conditional use permits have now been received for the previously announced Bar 20 project in Fresno County. Upon receipt of these permits, the Company submitted an application to CDLAC for an allocation to support the financing of that project with a revised expected output of 601,000 MMBtu/year of RNG ® compared to the previously announced 570,000 MMBtu/year. A decision regarding allocation is expected at the July 16 th CDLAC meeting.
The Company intends to sell RNG ® from all three projects to Pacific Gas and Electric under an existing long-term purchase arrangement.
Microgy obtained similar tax exempt financing for four RNG ® projects in Texas and recently obtained an allocation from the Nebraska Industrial Finance Authority for the project under construction at the JBS Swift facility in Grand Island, Nebraska.
"We are very pleased to have obtained the allocation from CDLAC for the Hanford and Riverdale projects," said Rich Kessel, President and Chief Executive Officer of Environmental Power. "We are eager to get the bonds placed and to commence construction so that we can start delivering renewable energy to our California customers and creating important environmental benefits for the citizens of the state."
"We have reached a milestone that many said could not be reached," Kessel added. "I am very proud of our entire team and appreciative of the support from our partners as well as from the state and local government agencies that assisted us in realizing this achievement."
ABOUT ENVIRONMENTAL POWER CORPORATION
Environmental Power Corporation is a developer, owner and operator of renewable energy production facilities. Its principal operating subsidiary, Microgy, Inc., holds an exclusive license in North America for the development and deployment of a proprietary anaerobic digestion technology for the extraction of methane gas from animal wastes for its use to generate energy. For more information visit the Company's web site at www.environmentalpower.com.
The terms of the bonds have not yet been determined Any offering of the bonds by the issuing authority, and the loan of bond proceeds to Microgy or its affiliates, remain subject to, among other things, adequate investor interest in the bonds and the negotiation and execution of definitive agreements. As a result, there can be no assurance that any offering of the bonds will be completed and the proceeds obtained by Microgy or its affiliates.
Offers to sell or the solicitation of offers to buy the bonds, if any, will be made only pursuant to an official statement of the issuing authority and only to qualified investors. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities, nor shall there be any sale of securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification of the securities under the securities laws of that state.
The Private Securities Litigation Reform Act of 1995, referred to as the PSLRA, provides a "safe harbor" for forward-looking statements. Certain statements contained in this press release, such as statements concerning planned manure-to-energy systems, our sales pipeline, our backlog, our projected sales and financial performance, statements containing the words "may," "assumes," "forecasts," "positions," "predicts," "strategy," "will," "expects," "estimates," "anticipates," "believes," "projects," "intends," "plans," "budgets," "potential," "continue," "targets" "proposed," and variations thereof, and other statements contained in this press release regarding matters that are not historical facts are forward-looking statements as such term is defined in the PSLRA. Because such statements involve risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to: uncertainties regarding the terms of, investor interest in and ultimate sale of tax-exempt bonds and receipt of proceeds therefrom, uncertainties involving development-stage companies; uncertainties regarding project financing, the lack of binding commitments and/or the need to negotiate and execute definitive agreements for the construction and financing of projects, the sale of project output, the supply of substrate and other requirements and for other matters; financing and cash flow requirements and uncertainties; inexperience with the development of multi-digester projects; risks relating to fluctuations in the price of commodity fuels like natural gas, and our inexperience with managing such risks; difficulties involved in developing and executing a business plan; difficulties and uncertainties regarding acquisitions; technological uncertainties; including those relating to competing products and technologies; risks relating to managing and integrating acquired businesses; unpredictable developments; including plant outages and repair requirements; the difficulty of estimating construction, development, repair and maintenance costs and timeframes; the uncertainties involved in estimating insurance and implied warranty recoveries, if any; the inability to predict the course or outcome of any negotiations with parties involved with our projects; uncertainties relating to general economic and industry conditions, and the amount and rate of growth in expenses; uncertainties relating to government and regulatory policies and the legal environment; uncertainties relating to the availability of tax credits, deductions, rebates and similar incentives; intellectual property issues; the competitive environment in which Environmental Power Corporation and its subsidiaries operate and other factors, including those described in our most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, well as in other filings we make with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date that they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.