Magnida has $500 million equity; EPC bids coming soon

The more I learn about Magnida, the more likely the American Falls greenfield seems. The team has been doing community relations in American Falls:

“We have $500 million in equity which gives us a great head start the previous project owners did not have,” said Magnida Chairman Ric Sorbo on Wednesday, Jan. 22 …

“One thing that is very important to understand; we do not have a project yet …

“We have people talking to banks all over the world trying to secure the financing we need, but there will be a day sometime this year when Bechtel and KBR will write a number on a piece of paper, put it in an envelope, slide that envelope across the table to us. If that number is within the scope of economic possibility then we can make the final push for financing. Then there will come a day when we reach ‘financial close.’ That will be the day we have a project,” said Sorbo …

He indicated Magnida expect financial close to happen in late August of this year.

It appears to me (from job postings, LinkedIn profiles, and US Senate lobbying disclosures) that the original American Falls clean coal power and fertilizer plant, led by now-defunct Refined Energy Holdings, has become a portfolio company of I Squared Capital, the New York City-based private equity firm, which was founded in 2013 by executives from Morgan Stanley’s infrastructure arm. The CEO who led the original project since 2008, Ramesh Raman, has now moved on, and Ric Sorbo (ex-SNC Lavalin) has taken over.

I’m happy to believe that a private equity firm would be willing to pull together $500 million to turn cheap gas into less-cheap fertilizer (when it launched, I Squared Capital was reported to be raising $2 billion for its infrastructure fund), but I see no information yet regarding feedstock supply contracts. Magnida expects to raise a further ~$1 billion in debt, assuming its projections match the actual cost of building the plant, on which KBR and Bechtel will submit bids later this year.

To my mind, along with long-term natural gas supply contracts, these bids are exactly what this project needs for it to become completely feasible: fixed cost, completion guaranteed EPC contracts. They say they expect this by August 2014. In the meantime, I’m not ready to upgrade the project’s likelihood in my database just yet – not until they find out what it’s really going to cost.

Read the local news story here.
See the updated page for American Falls, ID.

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