Fulcrum Bioenergy
Indiana Finance Authority Issuing $375M to Fulcrum Centerpoint to Build Biorefinery in Gary, Ind.
Thu 12/02/2021 16:06 PM
Relevant Document:
Offering Memorandum
The Indiana Finance Authority is issuing $375 million in environmental improvement revenue bonds to Fulcrum Centerpoint LLC, which proposes new construction of a facility in Gary, Ind., which would create transportation fuels from municipal solid waste, or MSW. The bonds are rated AAA/VMIG-1 by Moody’s. Morgan Stanley and Goldman Sachs are underwriting the deal. UMB Bank will be the bond trustee.
The AAA rating stems from the mandatory tender of the bonds on Nov. 15, 2022, and the backing of state and local government securities that will be purchased and escrowed to repay the bonds in the event that they are not refunded or remarketed with long-term debt, said market sources. The borrower has the option to redeem the bonds on or after May 15, 2022, at par.
Proceeds from the offering will finance the acquisition, construction and equipping of a biorefinery capable of converting 530,000 tons of MSW feedstock into nearly 33 million gallons of synthetic crude oil annually. The waste will be sourced from the greater Chicago area.
Centerpoint is a subsidiary of California-based Fulcrum Bioenergy Inc., or FBI, and this is its second project. The first commercial facility, Sierra BioFuels Plant, or Sierra, is in Storey County, Nev., and recently completed construction. FBI raised $289 million in financing, part of which is tax-exempt, as well as $150 million in equity to fund construction of the Sierra facility.
Sierra raised multiple financings between 2017 and 2020 through the state of Nevada. Bond pricing is below, with all bonds pricing at par. The most actively traded is the $105.8 million 6.25% Series 2017 green bond due 2037, which most recently traded in April at 96.75 to yield 6.5%:
The Sierra plant became operational in July and is the world’s first commercially viable plant that converts household waste into transportation fuel, according to a company press release. Fulcrum projected that Sierra would reach an annual maximum of 11 million gallons of syncrude production capacity in 2022 and generate $70.9 million in total revenue, with $30.2 million in cash flow available for debt service coverage of 1.8x, according to market sources.
Sierra has feedstock and offtake agreements with British Petroleum, United Air, Cathay Pacific, the U.S. Department of Defense and municipal solid waste companies - the same list of counterparties that Centerpoint will rely upon for commercial viability of its two thermochemical plants in Indiana.
--Seth Brumby and Chuck Sudo
Offering Memorandum
The Indiana Finance Authority is issuing $375 million in environmental improvement revenue bonds to Fulcrum Centerpoint LLC, which proposes new construction of a facility in Gary, Ind., which would create transportation fuels from municipal solid waste, or MSW. The bonds are rated AAA/VMIG-1 by Moody’s. Morgan Stanley and Goldman Sachs are underwriting the deal. UMB Bank will be the bond trustee.
The AAA rating stems from the mandatory tender of the bonds on Nov. 15, 2022, and the backing of state and local government securities that will be purchased and escrowed to repay the bonds in the event that they are not refunded or remarketed with long-term debt, said market sources. The borrower has the option to redeem the bonds on or after May 15, 2022, at par.
Proceeds from the offering will finance the acquisition, construction and equipping of a biorefinery capable of converting 530,000 tons of MSW feedstock into nearly 33 million gallons of synthetic crude oil annually. The waste will be sourced from the greater Chicago area.
Centerpoint is a subsidiary of California-based Fulcrum Bioenergy Inc., or FBI, and this is its second project. The first commercial facility, Sierra BioFuels Plant, or Sierra, is in Storey County, Nev., and recently completed construction. FBI raised $289 million in financing, part of which is tax-exempt, as well as $150 million in equity to fund construction of the Sierra facility.
Sierra raised multiple financings between 2017 and 2020 through the state of Nevada. Bond pricing is below, with all bonds pricing at par. The most actively traded is the $105.8 million 6.25% Series 2017 green bond due 2037, which most recently traded in April at 96.75 to yield 6.5%:
The Sierra plant became operational in July and is the world’s first commercially viable plant that converts household waste into transportation fuel, according to a company press release. Fulcrum projected that Sierra would reach an annual maximum of 11 million gallons of syncrude production capacity in 2022 and generate $70.9 million in total revenue, with $30.2 million in cash flow available for debt service coverage of 1.8x, according to market sources.
Sierra has feedstock and offtake agreements with British Petroleum, United Air, Cathay Pacific, the U.S. Department of Defense and municipal solid waste companies - the same list of counterparties that Centerpoint will rely upon for commercial viability of its two thermochemical plants in Indiana.
--Seth Brumby and Chuck Sudo
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