Asiagreed.info

Description:

The proposed project concerns the construction and operation of a 6 MW Waste Heat Recovery (WHR) system at a cement plant China, in order to generate electricity. The cement facility will implement a 6 MW and a 9 MW WHR system in two phases. This project centres around Phase 1, after the successful implementation of which is potential for involvement in Phase 2. The generated electricity will be used for captive purposes (cement facilities).

The Project approval and bank loan approval are granted, equipment purchase agreements are in place and studies such the FSR and EIA are issued and approved. The construction period is from October 2008 until July 2009.

The Chinese project developer is specialized and experienced in cement production. Main technology (i.e. boilers) will be supplied by “Hangzhou Boiler Group Co., Ltd.”, specialized in the production of WHR boilers and an experienced manufacturer with a history of over 30 years of successful boiler manufacturing. This project has an attractive expected equity IRR of 35% (calculated over the total equity, after taxes). In addition, this project has environmental advantages of efficiency improvements.

The project developer is seeking investment in equity and potentially debt in this 43 million RMB project. Investment could be in a newly formed SPV.

Timing:

The construction activities have started and the project is expected to be fully operational before the end of 2009. The project lifetime is expected to be around 15 years.

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)
• 30% Equity, of which 30% held by the project developer, and 70% held by the investor

In addition to the financing structure above, there is also the possibility for the investor to become the sole equity share holder and operate the project for a number of years under an ESCO type arrangement which would need to be negotiated with the Chinese developer.

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

Investors are welcome to propose and discuss their own preferred structures.