LOS ANGELES — A California company that has sought for a more than a decade to build a plant to turn rice straw into fiberboard received another extension last week from a conduit issuer on plans to issue $175 million in private activity bonds.
CalAg, LLC first received approval from the California Pollution Control Financing Authority in 2000 and has been granted a dozen extensions from the conduit issuer over the past decade.
"Project backers have had difficulty finding purchasers for the entire amount of financing the project requires so they have had to secure other equity partners and investors, which has delayed the project," said Bill Ainsworth, spokesman for State Treasurer Bill Lockyer, who serves as chair of CPCFA.
CalAG hopes to secure a private placement for $175 million of fixed-rate tax-exempt bonds and issue these bonds between the first and second quarter of 2014, according to a staff report from CPCFA. The bonds would include a restriction on transfers to qualified institutional buyers.
The company has obtained a private equity fund partner and is currently working with German Export Credit Agency for a loan guarantee to cover some of the costs, according to the CPCFA staff report.
The financing team includes Stifel, Nicolaus & Co. as placement agent; Orrick, Herrington & Sutcliffe, LLC as bond counsel; and Los Angeles-based Capital Strategies as financial advisor.
Jerry Uhland, CalAg's president, did not return phone calls regarding the financing.
The company plans to begin construction in April or May 2014 on the plant anticipated to take 18 months to complete. It would recycle 210,000 tons of California grown rice straw annually into fiberboard at the plant proposed for construction in Willows, California north of Sacramento.
The final resolution for the company's most current financing plan was originally approved on Nov. 17, 2010. Since then, it has asked for and received extensions multiple times, the most recent of which was set to expire on Dec. 31.
The three-member board on Dec. 17 approved a six-month extension to June 2014 to give the company additional time to finalize the financing structure for the transaction.
CPCFA's role is to help "improve the environment and create jobs by providing low-cost, tax-exempt bond financing to companies to construct or update pollution control, waste disposal or recycling facilities, including water furnishing and waste treatment facilities," Ainsworth said.
What CalAg wants to offer, according to CPCFA documents, is a way to reuse rice straw, thereby improving air quality by reducing the amount of open air burning of rice fields and reducing the amount of straw that is left in the fields to decompose after each harvest, reducing free airborne methane gas.
The conduit issuer has issued $13.9 billion in bonds since its inception in 1973 and has $4.3 billion in outstanding debt, according to its website. It has issued $38 million this year, Ainsworth said.
CPCFA's largest issuance last year was $734 million issued for Stamford, Conn.-based Poseidon to build a seawater desalination plant in Carlsbad, Calif. in a public-private partnership with the San Diego County Water Authority.
That deal involved $203 million in tax-exempt governmental bonds issued on behalf of the water authority to finance construction of the 10-mile pipeline, and $530 million in private-activity bonds for Poseidon to finance construction of the plant, which were subject to the alternative minimum tax.