UK ethanol project obtains financing underwritten by government

By Holly Jessen | May 25, 2012

A project to build Future Fuels LLP, a 200 MMlly (52 MMgy) wheat-to-ethanol plant in Grimsby, U.K., is moving forward thank to the fact that it has secured both senior debt and government underwriting.

Future Capital Partners, a green investment firm, announced the Belgian Export Credit Agency, the Office National De Ducroire, has underwritten the senior debt for the $263 million project. A major senior lender will provide $31.2 million in debt financing as well as serve as the mandated lead arranger to raise the remaining senior debt. “[This] is a major development for the project financing,” said Future Capital Partners CEO Tim Levy. “Having completed thorough due diligence and approved every element of the project’s business model, their backing will be the spur for other institutions to join in. We expect to be able confirm the full financial raise shortly.”

An additional $106.3 million in financing will be sought from investors. “The last few years have been one of the toughest fundraising environments in living memory, but with the key financing component in place the starting line for the build is now firmly in sight,” Levy said.

Construction is expected to begin after the deal closes in October, according to Vireol Ltd., the company that will operate the facility. “We will have built plant by latter part of 2014 with production volumes from early 2015,” CEO Dave Knibbs told EPM. 

The facility will utilize Katzen International process technology to covert wheat to ethanol and 175,000 metric tons of distillers grains yearly, according to the company’s website. The coproduct can be used in place of imported soybean meal as feed for chicken, pigs and cattle. CO2 will also be captured and used primarily within the food industry as well as for plant growing.

Unlike the high-protein hard wheat imported to the U.K. for bread making, the wheat feedstock that will be utilized at the plant is a soft, high starch, low protein wheat that is widely grown in Northern England. This feed wheat is in surplus, with the EU exporting 15 million metric tons and the U.K. about 3 million metric tons yearly.