$423 Million Deal also Shows Commercial Banks Interested in the Sector
February 15, 2006 – LAWFUEL – The Law News Network – Chadbourne & Parke LLP represented WestLB AG, New York Branch, as lead arranger and agent for a syndicate of seventeen senior lenders in connection with an approximately $423 million funding for three ethanol plants. The senior lenders are providing $275 Million of financing.
The deal is the biggest ethanol financing in U.S. history. The deal will finance the construction of three one hundred million gallons per year denatured ethanol production facilities. The facilities will be located in Bloomingburg, Ohio, Albion, Nebraska and Linden, Indiana.
In addition to the senior loans, approximately $85 Million of funding for the project will be provided by equity investors ASAlliances Holdings, American Capital Strategies, Laminar Direct Capital L.P (a member of the D. E. Shaw group), US Renewables Group, FDC Ethanol, LLC, a subsidiary of Fagen, Inc., Cargill Biofuels Investments (a subsidiary of Cargill, Incorporated) and Midwest First Financial Inc. Approximately $63 Million of subordinated debt will be provided by American Capital, Laminar Direct L.P. and US Renewables. Cargill is the corn supplier and marketer of ethanol and distillers’ grains. The project will be constructed by Fagen.
“This is by far the largest financing for an ethanol project and is a landmark for the ethanol sector,” said Rohit Chaudhry, a partner at Chadbourne. “The size and complexity of the transaction required creative solutions to bring this deal to a successful closing, and Chadbourne is delighted to have been involved in this significant project.”
“This financing lead by WestLB’s Oil, Gas & Petrochemicals Group is ground-breaking in many respects, and profound to many sectors including those on Wall Street. There is already a strong appetite for investment opportunities in well positioned ethanol projects, and we believe the ASA transaction has set the standard for investors across all segments of capital,” said Jonathan J. Kim, Director – Investment Banking North America, Oil, Gas & Petrochemicals.
“The closing of this landmark transaction in the ethanol industry is a testimony to the skills and perseverance of many, many talented people and organizations. We simply could not have accomplished this significant financing without the support and efforts of our service providers Fagen and Cargill, our financial partners American Capital Strategies, Laminar Direct Capital L.P., US Renewables Group, and Midwest First Financial and, of course, our lead bank WestLB. Each of these parties, together with their attorneys and advisors, deserves to be recognized for their irreplaceable contributions to this transaction,” said Michael Slaney, chief operating officer of ASA.
The Chadbourne deal team was led by Washington, D.C. partner Rohit Chaudhry and associate Marissa Alcala. Houston partners Todd Alexander and David Schumacher, D.C. partners Andrew Giaccia and Robert Shapiro, New York counsel Thomas Charbonneau and D.C. visiting attorney Damian Krell also worked on the deal.
Chadbourne is one of the leading law firms in the ethanol industry, and currently represents participants involved in the development and financing of more than one billion gallons of new ethanol production.
The recently enacted Energy Policy Act includes a renewable fuels standard, which requires the blending of 7.5 billion gallons of renewable fuels, including ethanol and biodiesel, into motor fuel by 2012.
About Chadbourne & Parke LLP
Chadbourne & Parke LLP, an international law firm headquartered in New York City, provides a full range of legal services, including mergers and acquisitions, securities, project finance, corporate finance, private equity, energy, telecommunications, commercial and products liability litigation, securities litigation and regulatory enforcement, white collar defense, intellectual property, antitrust, domestic and international tax, insurance and reinsurance, environmental, real estate, bankruptcy and financial restructuring, employment law and ERISA, trusts and estates and government contract matters. The Firm has offices in New York, Washington, D.C., Los Angeles, Houston, Moscow, St. Petersburg, Kyiv, Almaty, Warsaw (through a Polish partnership), Beijing, and a multinational partnership, Chadbourne & Parke, in London. For additional information, visit www.chadbourne.com.
