The Earth to Energy project will use tax-exempt bonds as part of the financing package for its commercial facility.
White Castle, LA (March 2, 2021) – American BioCarbon, an innovative manufacturer of renewable products made from sugarcane bagasse, has been awarded $44 million in Louisiana carryforward private activity bond allocation. in carry-forward allocation and was one of only five applicants to receive an award.
The project previously received $60 million in allocation, bringing its total to $104 million. American BioCarbon has engaged Jeffries, LLC, a global leader in investment banking, as its placement agent for the tax-exempt bond issuance.
The company currently operates a demonstration plant which is co-located with the Cora Texas Sugar Mill and will build and operate a new commercial-scale facility at the White Castle site to produce 100,000 tons per year of pellets by 2022. This facility will produce $32m in annual sales generating an EBITDA of $17m.
Federal tax code classifies state and local bonds as either governmental bonds or private activity bonds and allows state and local governments to use tax-exempt bonds to finance certain projects that would be considered private activities. (Governmental bonds are intended for governmental projects, and private activity bonds are for projects that primarily benefit private entities.) The private activities that can be financed with tax-exempt bonds are called “qualified private activities.” Congress uses an annual state volume cap to limit the amount of tax-exempt bond financing generally and restricts the types of qualified private activities that would qualify for tax-exempt financing to selected projects defined in the tax code.
The Louisiana state volume cap is computed and adjusted annually by multiplying the number of residents in the state by an amount set forth in Federal law. The Governor of Louisiana issues an Executive Order granting a bond issue an allocation from Louisiana’s state volume cap prior to the issuance of the bonds, in order for the interest on the bonds to be tax exempt.