Macquarie-owned Teesside biomass plant secures £80m emergency funding

A biomass plant in Teesside, North East UK, backed by Macquarie has secured emergency funding of £80 million (€92 million) to avert an “imminent cashflow crisis”, reported The Times.
The Tees Renewable Energy Plant has raised additional funding as it seeks to relaunch operations following delays and setbacks to the £1 billion (€1.1 million) project.
The plant is one of the largest of its kind in the world and is capable of producing enough electricity for 600,000 homes.
Documents seen by The Times warn that the plant was on course to breach a £15 million (€17.4 million) liquidity requirement in July, and was at risk of becoming cashflow-negative by late September.
The documents state: “The delays and defects in the construction of the power plant have severely adversely affected the group’s liquidity and the group now faces an imminent cashflow crisis. In these circumstances the group urgently requires an injection of new money in order to avoid formal insolvency proceedings,” said The Times.
Construction delays and a contractor dispute led to the project being pushed back for over two years.
Although it began operation in July last year, management discovered design defects at the beginning of this year, which led to further delays.
The biomass plant's management team has begun a programme of modification works, but the plant is not yet operational.
The site eventually will generate revenue under a government contract to deliver electricity at a set price until December 2035.
The plant has been supported by additional shareholder loans of about £140 million (€162.5 million) since it was first due to become operational in January 2020. It has now used an insolvency procedure to secure another round of funding.
Cantor Fitzgerald was appointed in October last year to secure a sale of the site or new third-party investment. It found two serious bidders, but they required a debt write-off that was unacceptable to creditors.
Now the plant’s shareholders have agreed to provide up to £53 million in extra cash.
Documents seen by The Times state that creditors were reluctant to lend new money but had agreed to provide about £27 million.
The creditors faced losing up to 29% of their investment in the event of a full insolvency, according to analysis by experts at Alvarez & Marsal.