EverGen Infrastructure Corp (TSX-V:EVGN) revealed that it has signed a term sheet with its existing lender, Roynat Capital, a subsidiary of Scotiabank and Export Development Canada (EDC) for a $31 million syndicated senior term loan to support the upgrade and construction of its Renewable Natural Gas (RNG) facilities at Fraser Valley Biogas (FVB) and Net Zero Waste Abbotsford (NZWA).
"The facility is an integral component to EverGen’s capital structure as we embark on our planned upgrade and expansion projects, and we are very pleased to have the support of high-quality debt partners in Roynat and EDC,” EverGen CEO Chase Edgelow said in a statement.
"This facility ensures our near-term Core RNG Expansion projects are fully funded to deliver 480,000 gigajoules (GJ) of RNG annually and compliments our strong balance sheet, positive cash flow and anticipated grant funding available to EverGen. This incremental liquidity and financial flexibility is fundamental as we continue to expand our RNG infrastructure platform across Canada," he added.
READ: EverGen buys 67% stake in Alberta-based RNG facility GrowTEC
Edgelow said the milestone builds on the addition of the firm’s Alberta and Ontario projects (GrowTEC and Project Radius) which are delivering “accretive growth”.
The proposed facility is a five-year senior term loan with a 10-year amortization period and interest-only payments for the first 12 months. The facility is secured by certain assets of the company and includes customary terms and conditions. The facility will bear interest at a rate of 30-day Banker’s Acceptance +3.5% to 4.5% based on certain covenants. The facility remains subject to the successful completion of due diligence, said the company.
Once approved, $15 million will be available to finance the Fraser Valley Biogas RNG Expansion Project and an additional $16 million will become available to EverGen to support the Net Zero Abbotsford RNG Expansion project.
Update on core RNG expansion projects
Meanwhile, the company provided an update on the Fraser Valley Biogas RNG expansion project. The FVB facility is currently undergoing a capital expansion project to add additional RNG production capacity that is expected to double the capacity and increase RNG production to approximately 160,000 GJ per year. Capital costs for the project are pegged at $13 million-to-$15 million with construction beginning in late third quarter 2022, said the company. It is likely to be finished by 1Q 2023.
The upgrades, coupled with a new off-take contract that is in late-stage negotiations, will provide a significant uplift to EverGen’s RNG production capabilities to around 120,000 GJ per year, with the ramp-up to full capacity of around 160,000 GJ per year expected to begin in mid-2023, following amendments to existing permits, EverGen said.
Meanwhile, the company added that capital expansion project at the Net Zero Waste Abbotsford RNG Expansion project in British Columbia will add anaerobic digestion capabilities to produce biogas, which will then be upgraded to RNG to feed into FortisBC’s gas network under an existing 20-year off-take agreement.
The expansion is expected to increase the facility’s inbound organics throughput to around 135,000 tons of feedstock per year and is designed to produce roughly 180,000 GJ of RNG per year. Capital costs for this project are pegged at $32-to-35 million. Construction work on the upgrade will begin on receipt of building and regulatory approvals, for which applications were submitted earlier this year, said the company.
At this stage, the project is anticipated to break ground in approximately 12 months, followed by a 6-to-8 month construction window, noted the company.
Investors can learn about updates on the GrowTEC RNG Expansion project in Alberta and Project Radius in Ontario here.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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