China Everbright International signed an agreement yesterday with the Asian Development Bank (ADB) and six commercial banks to borrow $100 million. The cash will be used to finance a series of new waste-to-energy (WTE) plants using clean technology across several second-tier Chinese cities.
The $100 million B-loan will be provided by Mizuho Corporate Bank and Hang Seng Bank, which are joint-leaders of the consortium, three Taiwanese lenders (Bank of Kaohsiung, Cathay United Bank, Chang Hwa Commercial Bank) and Export Development Canada, with ADB as the lender of record. All the participating banks will share the benefits of ADB’s preferred creditor status.
It was the first syndicated deal for a Chinese company, or of any kind, arranged in Hong Kong so far this year.
“This capital infusion can strengthen the group especially in view of the current uncertain global economic environment,” said Chen Xiaoping, chief executive officer of Everbright at a closing ceremony yesterday.
Everbright’s core businesses are the provision of alternative energy and environmental protection technologies. These include WTE, biomass power generation, solar photovoltaic energy, wind power, methane-to-energy and waste water treatment.
The new unsecured facility has a five-year tenor that can be extended a further two years, and contains environmental protection clauses in addition to standard loan covenants. Repayment will amortise after 18 months, but neither Everbright nor the banks were able to disclose the interest rate payable, although they insisted it was “competitive”.
In 2009, ADB lent Everbright $100 million (the A-loan) for 10 years and provided technical assistance of $600,000 from its Clean Energy Fund, which has already been spent on WTE projects in Jinan, Jiangyin and Zhenjiang.
The Suzhou project in Jiangsu was recently completed with the earlier ADB loan and is the largest WTE operation in China, processing 2,500 tonnes of waste a day and generating 200 million kilowatt-hours of on-grid electricity annually.
“Unlike most other waste-to-energy technologies, [the projects] do not require coal supplements,” said Hisaka Kimura, principal investment specialist in ADB’s private sector operations department. These will be “model municipal waste disposal projects that can slash waste volumes by 90% and eliminate methane gas emissions from the treatment process”.
“Private sector support — particularly at this uncertain time for the global economy — signals the importance and value of these kinds of projects,” he added.
China has become the world’s biggest producer of municipal solid waste, with production growing at about 10% a year. Most of it is dumped untreated into landfills, contaminating soil and groundwater, and poisoning the urban poor.
On December 15 last year, China issued a “Notice of the Twelfth Five-Year Plan of the State Environmental Protection” with the intention “to further develop business in the WTE sector”, and “transform these wastes into energy in China with an aim to create a liveable environment”, said Chen.
Everbright started its WTE business in 2003, and has so far built nine plants in cities in Jiangsu and Shandong provinces, and is in the process of constructing a further three projects in Jiangsu and Guangdong. Between 2006 and June 2011, the company has processed around six million tonnes of household and industrial trash, generating about 1.8 billion kilowatt-hours of “green” electricity, according to Chen.
He claimed that this was the equivalent of fulfilling the annual electricity consumption of 1.5 million households, reducing the need of about 740,000 tonnes of standard coal and cutting carbon dioxide emissions by 2.3 million tonnes. All the company’s WTE projects now comply with the Euro 2000 Standard.
Everbright’s fortunes have also thrived. Between 2005 and 2010, its assets and profits grew by 30% and 40% respectively. The company is listed on the Hong Kong stock exchange.
