Rentech, the biomass and biofuel developer, has scraped plans to develop a fully-permitted biomass power project in Florida.
The Los Angeles company, pressed by a tightening credit market, has stopped the development of its wholly-owned, 55 megawatts, $225 million, Port Saint Joseph biomass project in Florida. This was one of the company’s signature initiative and is the third project axed by Rentech. The company blamed the Saint Joe shutdown on its inability to secure “private financing on acceptable terms.”
Until this summer Rentech had been counting on a Department of Energy Loan Guarantee to finance part of Saint Joe. However, earlier this summer, the DOE effectively turned down Rentech’s loan application.
To make up for the DOE money Rentech turned to a group of unnamed private funders but was not able to strike a deal with them. Those talks coincided with the European debt crisis, which over the past weeks has pushed banks to tighten lending, increasing overall cost of funds.
The overall tough funding climate has forced Rentech to significantly slim down its project pipeline. In October the company stopped the development of its 1,500 barels per day Rialto biofuel refinery in California. It also halted development work supporting a 30,000 barrels per day coal-to-synthetic fuel refinery in Natchez, Miss.
Rentech will book a $4.8 million charge because of the Saint Joe shutdown. Combined, the closing of the Saint Joe, Rialto and Natchez projects will generate up to $60 million in non-cash impairment charges, the company said.
Rentech is not totally walking away from project development. The company recently completed a $59 million demonstration syngas plant in Colorado. The government funded facility is expected to go live by year-end.
Earlier this month Rentech’s, Rentech Nitrogen Partners, a manufacturer and marketer of nitrogen fertilizer products, raised more than $136 million in an Initial Public Offering.