Asiagreed.info

Description:

The proposed project concerns the construction and operation of a 40×0.5 MW coal mine methane (CMM) power plant in a coal mine in southwest China. The project includes two phases and for each phase 20 power units will be installed. However, all of the 40 power units can be installed once if the financing is sufficient. The total annual generation amount of the project is 109,200 MWh, of which more than 90% is sold to the public power grid. The power plant will consume 35 million m3 of pure CMM annually.

Important studies such as the FSR and EIA are completed and the project has been approved by the government. Construction will commence once the financing is secured and the expected commissioning date will follow a year after.

The equipment will be manufactured and provided by “Shengli Oilfield Shengli Power Machinery Co., Ltd.”, a leading manufacturer (most experienced in China) with over 30 years of experience in gas turbine manufacturing. This project has a very attractive expected equity IRR of around 112% (calculated over the total equity, after taxes). In addition, this project has the social and environmental advantages of a new energy project the waste gas.

The project developer can provide 20-30 million RMB and the investors are expected to hold a significant share of equity. Investors are also welcome to provide convertible or nonconvertible loan. The project developer is seeking investors to invest around 22 million RMB in this 84 million RMB project. Investment is in a newly formed SPV.

Timing:

Construction will commence once the financing is secured and the expected commissioning date will follow a year after.

Key Financial Parameters:

Proposed Financial Structure:

The following proposed financial structure is subject to further negotiation:

• 65% Chinese Bank debt (10 years, 7% annual interest)
• 5% Non-convertible debt provided by investor (10 years, 8% annual interest rate)
• 12.35% Subordinated convertible debt provided by investor (10 years, 8% annual interest rate)
• 17.65% Equity, of which 51% held by the project developer, and 49% held by the investor

The proposed financial structure includes the option to enhance the return by converting the subordinated convertible debt to equity.

The financing structure may be subject to requirements from the Chinese government, depending on the legal status of the investor.

More details and a tailored investment proposal can be discussed.