Waste Management Buys Into Fulcrum Bioenergy, Agrees to Finance Company’s Launch Project

by Terrence Murray - November 18, 2011

Fulcrum Bioenergy, a company that makes advance biofuel from garbage, has found a way to finance a crucial pilot plant thanks to Waste Management, which on Friday announced the acquisition of a minority equity stake in the California biofuel company. As part of the deal, Waste Management has also agreed to provide Fulcrum up to $70 million in debt financing supporting the construction of its $180 million, Sierra BioFuels demonstration plant in Nevada.

A few months ago Fulcrum was on track to finance the Sierra plant with a Department of Energy loan guarantee. The company had reached term sheet negotiations  with the DOE, when earlier this year  the DOE put the loan application on hold, concluding that the financing would not close by the loan guarantee’s September 30th expiration date.

Construction on the Sierra plant  is slated to start at the end of the year. Fulcrum still anticipates getting federal money to finance the plant, shows  a recently (SEC) document, supporting Fulcrum’s expected $115 million Initial Public Offering (IPO).

If the government funding fails to materialize, the Waste Management debt will “provide us…a back-up source of debt capital,” Chief Financial Officer Eric Pryor said, in a prepared statement released Friday. Fulcrum will tap a portion of its IPO to finance the balance of the project costs.

Fully operational the Sierra plant will process 147,000 tons of waste per year to produce about 10.5 million gallons of ethanol.

Regarding the venture investment, Waste Management invested as part of Fulcrum’s third round, which now totals $93 million. Other investors include  USRG Management Company and Rustic Canyon Partners.

In the past five years Waste Management has built an ambitious portfolio of waste-to-energy and cleantech investments. The company is Invested in Enerkem, the Canadian waste-to-biofuels company developing plants in Western Canada and Mississippi. Waste Management also backs California-based green chemicals maker Genomatica and Agilyx, a Beaverton, Ore. company that converts difficult-to-recycle plastics into crude oil.

TM, Chicago





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