Member Article

Stobart Group to build £110 million biomass plant in Cheshire

Support services and infrastructure group, Stobart Ltd, has reached financial close on a deal to build a biomass plant in Cheshire, having signed a 16-year index-linked fuel supply agreement for the venture.

The £110 million combined heat and power (CHP) plant, at the company’s multi-modal site in Widnes is set to come on-stream in December 2016.

Stobart’s Energy arm will supply the plant with 146,000 tonnes of waste food material per year over the 16-year contract, with expected initial revenue of £5.7 million per year.

The Group says that the initial revenue stream equates to a revenue stream of £108 million over the course of the contract.

Stobart Energy will use the 7.8 megawatt thermal of heat the plant is contracted to produce for an adjacent wood drying facility it will also operate.

Stobart Rail is to construct the facility for £5 million, and Stobart expects to sell the material to the rapidly-expanding small scale wood chip and pellet market. It estimates the wood-drying facility will produce £200 million in revenue over the life of the agreement.

The Group said it expects its rail business to generate revenue from the plant by being contracted to act as the a civil works subcontractor on behalf of Burmeister & Wain Scandinavian Contractor AS, the engineering, procurement and construction contractor. It expects this, along with the construction of the wood-drying facility, to generate £15 million in revenue.

Under the financing deal for the plant, Stobart Infrastructure will make a £7.5 million equity investment for a 40% stake in Mersey Bioenergy Ltd, the holding company for the biomass plant.

The Green Investment Bank will provide 49% of the equity for the holding company, and Burmeister & Wain will take an 11% stake.

The financing of the plant will be provided through £42.5 million senior debt facility from Investec Bank PLC and Eksport Kredit Fonden and mezzanine financing of £41.9 million from GIB and Gravis Capital Partners.

This was posted in Bdaily's Members' News section by Simon Malia .