Plasco secures $140M in fresh equity financing

By KRYSTLE CHOW
Published on the Ottawa Business Journal website.
March 22, 2011

Click here to view this article on OBJ.ca.

Rod Bryden.
Rod Bryden.
Ottawa Business Journal file photo.

Plasco Energy Group Inc. has brought in another $140 million in equity financing to fund its waste-to-energy projects in six regions, the Ottawa-based company announced Tuesday.

The firm, whose plasma gasification technology processes household garbage and turns it into green energy, said it’s secured a new financing round led by Soros Fund Management LLC.

The proceeds will be used to fund commercial projects in development in Canada, California, the United Kingdom, Poland, the Caribbean and China, Plasco said.

“The new round of capital bolsters our balance sheet and puts us in a position to execute on multiple projects that have emerged since our last round of financing,” said Plasco CEO Rod Bryden in a statement. “The performance of the company’s existing Ottawa plant and a strong pipeline of contract opportunities have allowed us to demonstrate to investors that our technology is proven and ready for commercial delivery.”

The funding follows on from a $110-million equity financing led by Ares Management LLC in July 2010, and brings the total amount of money Plasco has received to more than $350 million.

In an interview with OBJ, Mr. Bryden said the new dollars will go towards the equity portion of the various projects in its pipeline, which have a total capital cost of about $1.2 billion. Approximately a third of that will be funded by equity, with the balance to be from debt financing, he explained.

Mr. Bryden said Plasco will invest about half of that $360 million or so in equity, with the expectation being to locate partners for the other 50 per cent.

The most capital- and time-intensive portion of Plasco’s projects, Mr. Bryden said, is the engineering of its waste-to-energy equipment, with a small share of the funding taken up by the construction of the plants’ civil infrastructure and actual bricks and mortar.

One of Plasco’s most advanced projects is located in Red Deer and could see equipment delivered by as early as the end of 2011.

“We expect the production of specific equipment (for the Red Deer plant) to begin in the next several weeks or months,” he said.

However, the building of the plant’s supporting infrastructure likely won’t take place until the following construction season, which means Red Deer won’t start processing waste until around late 2012 or early 2013.

As well, Mr. Bryden explained the project hinges on it receiving a crucial grant from the federal government’s Green Infrastructure Fund, although he said he’s optimistic it will.

At around the same time, Plasco anticipates completing work on its full-scale Ottawa plant, as long as the current council agrees to go ahead. While the project has already received advanced approvals from the Larry O’Brien-led council, Mr. Bryden said he expects the new administration will want to take a look at it again.

“The contract work (on the Ottawa facility) has been advanced a long way, so it won’t take long after the point when we go back to council. And if they agree to proceed, it shouldn’t take long to enter into a contract,” he noted, which puts the Ottawa launch shortly after Red Deer.

Many of the other developments, meanwhile, are depending on data from Plasco’s Trail Road demonstration facility, which has been processing post-recycled waste from the city of Ottawa since the beginning of 2008.

The company is in the process of getting a new indefinite permit from the Ontario Ministry of the Environment to operate the local municipal solid waste conversion facility. The previous permit for the three-acre demonstration plant expired on Jan. 21, 2011.

Mr. Bryden said that, barring any complications, he expects the environmental screening process for the Trail Road facility ought to be completed by early this summer, following which the ministry will be in a position to issue a certificate of approval for the plant.

“There’s no reason for concern that there will be a delay or that it won’t be issued,” Mr. Bryden said, noting that the approvals will mean that Plasco will be able to gradually increase the maximum amount of solid waste the facility takes in, to 135 tonnes from its current 85-tonne level.

Trail Road is an important piece of the puzzle in showing prospective clients that they will be able to reliably reproduce the energy production results in their own Plasco-built plants. For example, California’s Salinas County gave its approval according to the U.S. state’s Renewables Portfolio Standard for energy produced at Trail Road. The county recently announced it had selected Plasco after a three-year-long competitive process, and is now going through the environmental screening process for a proposed facility before signing a final contract.

Other California projects have also agreed to issue advance green approvals for the energy as long as Plasco is able to prove it’s doing the same thing, allowing the company to sell its power at a much higher rate.

Mr. Bryden added Plasco is “well-advanced” with agreements for developments in two Polish cities and a project in the United Kingdom, although no details can be released yet. The company is also in the advanced stages of exploring opportunities in the Caribbean, where waste-to-energy processing is an attractive alternative to using valuable land for landfill space, he said.

As for Plasco’s Chinese development, Mr. Bryden commented: “We have the various elements to get started on building a plant there within the next calendar year or early next year.”

And all that progress has made the company an attractive investment, despite its pre-revenue state, he added. “The valuation of the corporation tends to move along on the view of investors about the level of confidence they have in our project pipeline and the time to deliver them.

“I believe our value will be increasing in the current year, provided we continue the path we’re on.”

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