BECHTEL & EEE:
More info on Bechtel agreement
I used to be worried about the money needed to build the new plants, but not anymore. Evergreen isn't going to be financing these new plants, that's for sure. They only have about $100M - $150M in the bank, and construction costs will average $75/ton of capacity. That means somebody is going to have to come up with $600M just to build an 8 megaton plant. There are rumors that Goldman is going to be involved in financing, but I haven't been able to confirm that. They also have an analyst working this stock:
phx.corporate-ir.net
It is however public information that Sumitomo is VERY interested in financing new plants, and Collins made it clear during the last conference call that Sumitomo was being given an opportunity to bid on new projects. From where I stand, it looks like these financial guys with the deep pockets are standing in line for the opportunity to finance these new plants.
fulldisclosure.com
Also consider that Evergreen recently sold $95M in convertible bonds. You can be sure that Credit Suisse did their homework before they forked over that kind of money. At this point, finding the money doesn't seem to be a major problem:
phx.corporate-ir.net
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If you were Bechtel, would you go through the trouble of putting together a billion dollar contract if you thought it didn't have any significant chance of ever bearing fruit? These Bechtel guys have been working closely with Evergreen over the last year. They know who lays the golden eggs, and they want to be first in line.
phx.corporate-ir.net
Sumitomo has already stated that not only do they want to finance new construction, but they are also interested in performing the new plant construction. They also have a lot of experience with big coal plant projects, and both Sumitomo and Bechtel want a big piece of the action.
sumitomocorp.co.jp
The $10M "bail-out" fee in the Bechtel contract is interesting. My best guess is that is somehow related to free/reduced cost up front services which Bechtel is willing to provide to get an exclusive deal. Evergreen needs to conserve as much cash as possible until those new plants are up and running, and Bechtel knows it. Offering to do some pre-engineering work on those new plants makes good sense from a business perspective. It gets their foot in the door, and gives them an opportunity to prove themselves. Assuming they make those new plants work, Bechtel stands a good chance of getting many more contracts. Like I said earlier, Bechtel knows who lays the golden eggs. |
