An official with the Municipal Review Committee, which represents the solid waste interests of 115 Maine communities, said Thursday that it could take upward of two years for a waste-to-energy plant in Hampden to become profitable once it’s operational again.
Karen Fussell, MRC’s board president, said during a virtual public hearing that a significant part of investment in the plant would come after it is purchased as there is a cost to restart and ramp up waste into the facility and make it profitable.
“We estimate that those costs are going to be in the range of $20 million, which is not insignificant,” Fussell said.
The MRC has been discussing how to finance that cost and has been working with state and federal agencies, as well as other entities.
“It is very difficult to find a source of financing, because everyone is looking for collateral …” she said.
The MRC announced earlier that it plans to buy the Coastal Resources of Maine plant for $1.5 million if no adequate qualified bidders purchase it before June 30.
It voted unanimously last month to support an agreement with the facility’s bondholders, who control the plant, to allow for a final sale of the plant by that date, with the bondholders covering the cost to reinstate a receiver to conduct the bid process.
Thursday’s meeting laid out that process. MRC’s executive director, Michael Carroll, said an investment banker will be hired to conduct a round of solicitations for a buyer and an asset purchase agreement will be executed between the MRC, the receiver and the bondholder.
Buyers will be considered qualified if they have the financial capacity to acquire the plant — actually have the money in the bank, according to Carroll. The buyer must have the capacity to operate the plant knowing it will do so at a loss before positive cash flow is realized, Carroll said.
The cost to construct the plant was about $85 million, with $52 million of that provided through bond financing, and those bondholders are the ones now in control of the plant, according to Fussell. The trustee for the out-of-state bondholders is the U.S. Bank National Association.
Asked Thursday why the bondholders are willing to accept only $1.5 million for the plant after investing much more than that, officials said they think the bondholders may be hoping for more than that with potential qualified buyers. They also said they think the bondholders realize the agreement is their best option after a long and difficult process for finding a buyer.
The other $30 million for plant construction was financed through private equity and those financers have gone away since they lost their investment, Fussell said prior to Thursday’s meeting. The plant had run about seven months at full commercial operation before it shut down on May 27, 2020, she said.
The MRC owns the land on which the plant is located and, thus, is its landlord.
In January, the MRC board met to discuss seeking other ways to reopen the plant following failed, months-long efforts to find a qualified buyer. Discussions eventually led the to board to position the MRC as a potential buyer.
The Hampden facility closed for financial reasons. Coastal Resources of Maine was formed by the company Fiberight to finance, run and operate it. While the plant is closed, about 25% of MRC members’ waste is taken to Waste Management in Norridgewock, and the other 75% goes to the Penobscot Energy Recovery Co. in Orrington.
The bondholders have been trying to sell the plant with help from the MRC. MRC’s interests and efforts to that end, however, have been stymied by the complex ownership structure and inaction on the part of the bondholders, who hold primary position in the receivership and sale process, according to MRC board members.
A Pennsylvania company, Delta Thermo Energy Inc., tried to buy the plant but lost exclusive rights to do so in December because it failed to show it could finance the sale. MRC officials said Delta also did not cover the costs to keep the plant in working condition over the winter.
The MRC now is putting together an outline and concept for a financing option that would involve a full faith and credit guarantee by member municipalities, according to Fussell.
“We anticipate that we will have that more fully fleshed out and available to members in probably early April,” she said.
Members interested and able to participate and provide backing for the concept would receive a waste tip fee discount for a period of time.
The $1.5 million is the amount that the MRC could afford to buy the plant, she said.
Carroll said if MRC buys the plant, it would bring in an entity to operate it.
Central Maine communities that are members of the MRC include Albion, China, Freedom, Oakland, Palmyra, St. Albans, Thorndike, Troy, Unity and Vassalboro. Many communities had been sending their waste to the Hampden facility as part of a long-range deal brokered by the MRC.
Fussell said MRC officials anticipate another public meeting will be held in mid-April. A regular MRC board meeting is scheduled for April 27, she said.
She said MRC members are excited about the latest developments. Getting to this point, she said, has been a long road and the MRC knows everyone is looking for the process to be over and move forward with a plant that is operating and processing waste as intended.
“It looks like we’re on that road,” she said.
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