"There really hasn't been a downside. Our roads and all the infrastructure have been in place," Sweet says. "Everybody's been good neighbors. There was no groundswell of opposition to this."
The project, which has been on the drawing board for several years, had been "very close to being financed in 2008, but then the credit market fell out," McKillip says. The project also changed owners last year when Enova acquired an 80% stake in PRE from Decker Energy International Inc. and NuPower LLC. NuPower retained a 20% interest.
Brunstad says the project attracted Enova for several reasons, but it was the financial structure of the deal—which prompted Project Finance magazine to name Enova and PRE as winners of the 2011 North American Mezzanine Deal of the Year award—that made the project a reality. Under the terms, Carlyle Energy Mezzanine Opportunities Group is providing $125 million in senior secured debt, which PRE will repay over five years. SAIC is providing the balance in the form of deferred payments to be repaid after the plant starts up.
That type of deferred EPC financing "puts SAIC on the PRE board with full participation in the financing. If we had just been an EPC contractor, we would have had no visibility as to where the money comes from," McKillip says. "Prior to the closing, it gives us comfort to know that the project is viable and that we aren't essentially wasting our time," he adds, referring to the many projects that have been canceled or delayed due to financing issues during the recession.
"Also, Carlyle wouldn't have put money in without SAIC being involved, because they wanted the assurance that they will have an EPC contractor to build it," McKillip says.
For Enova and PRE, the financial structure provides access to capital that it did not have on hand, Brunstad says. Owners typically look to the European project financing market for help on these types of projects, but the European debt crisis curtailed that, he says. Carlyle and SAIC stepped up, however, with financing that was "unusual, mainly by virtue of the credit markets that were difficult, if not impossible, to tap last summer."
The project is also eligible for the Treasury Dept.'s 1603 cash grant, McKillip says. If, however, it is not completed by the December 2013 deadline, the project would not get the grant. SAIC would incur damages as stipulated in its EPC contract, and be liable for the grant, he adds.
"Our challenge is the schedule," McKillip says, adding that he is confident that his team will meet it.
PROJECT TEAM Owner/Developer: Enova Energy Group and NuPower EPC, Contractor: SAIC, Architect/Engineer: SAIC, Site Civil Engineer: Anchor Engineering, Site Civil Subcontractor: Manafort Bros., Structural Steel Subcontractor: Berlin Steel Construction Co., Mechanical & Plumbing Subcontractor: Tucker Mechanical, Technology Providers: Alstom Group; Outotec, Financers: Carlyle Energy Mezzanine Opportunities Group & SAIC ">