Staff Writer

While still interested in public financing at some future date, the owners of the proposed ethanol plant in Carlisle have secured private equity financing for the project.

Union County Council held a public hearing on the issuance of up to $125 million in revenue bonds to raise money for a loan to Osage Bio Energy, the company building the ethanol plant. The hearing was requested by the S.C. Jobs-Economic Development Authority (JEDA) which would issue the bonds and lend the proceeds to Osage. JEDA Vice-President Harry A. Huntley said that a public hearing is required by federal law for the issuance of tax exempt bonds.

A notice published in the Sept. 19 edition of The Union Daily Times stated that the money would be used for buying, building and equipping solid waste and sewage treatment facilities associated with the plant.

Osage Chief Financial Officer Andy Weaver said Friday that while the hearing lays the groundwork for possible future public financing of the project, the company has already secured funding for the project from a private equity firm. Though still interested in public financing at some future date, Weaver said Osage decided to go with private equity financing rather than bonds because of the turmoil in the credit markets.

“Right now we're laying the groundwork for future tax exempt financing, but with the credit markets in turmoil it doesn't make sense to do that today,” Weaver said. “We're going forward with the construction of the plant with full equity support of First Reserve Corporation. First Reserve is a private equity firm which focuses on investments in energy. They go to pension and other investment funds that want to invest money with them and they get commitments for that investment. They've got the commitments to fund the building of the Carlisle facility.”

Construction of the facility is projected to cost approximately $170 million. Weaver said the plant will include solid waste treatment processing systems which will be used partly to produce energy pellets from the barley hulls which can then be sold or used by the plant. The systems will also produce a high quality animal feed known as barley protein meal which can be sold to local beef or dairy farms and the poultry and swine industries.

When completed and fully operational in 2010, the facility will employ approximately 60 people in the production of ethanol and barley protein meal. The plant will generate 68.2 million gallons of ethanol a year, primarily from barley, but is also designed to use wheat, corn or milo if necessary.

Huntley said that while the groundwork for the issuance of the bonds is being laid, they will not be issued unless Osage requests it. He said if the bonds are issued and a loan made to Osage, the company, not the taxpayers of Union County and South Carolina will be responsible for repaying the bonds.

“There will be no tax liability for the people of Union County and no liability on the state's part,” Huntley said. “It will fall to the company building the plant to repay the bonds.”