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Kent County has indefinitely delayed plans for a $380 million sustainable business park and bioenergy plant as its primary business partner and anchor tenant struggles to remain solvent.
Burlington, Ontario-based Anaergia Inc. was selected in 2021 to enter into a project development agreement with the Kent County Department of Public Works (DPW) for the Kent County Bioenergy Facility, the intended anchor tenant for the county’s broader Sustainable Business Park.
However, the county Board of Commissioners recently delayed a vote to advance the project while DPW reviews its partnership with Anaergia in light of a dire financial situation for the waste solutions company.
“Over the coming months, the Kent County Department of Public Works will continue its due diligence on the Kent County Bioenergy Facility project and how changes in Anaergia’s financial position may impact this project,” Dar Baas, director at Kent County DPW, said in a statement provided to Crain’s Grand Rapids. “After consulting with the Kent County Board of Commissioners, we have delayed any vote while our review and due diligence takes place.”
Anaergia has not responded to a request for comment.
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In August, Anaergia reported its most recent financial results for the second quarter of 2023, which CEO Brett Hodson said in an earnings call with analysts was “a difficult and challenging time for Anaergia.”
While the company’s revenues increased slightly at 1.5% from the same period last year, the company’s net losses increased nearly 300%, while adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) decreased by more than 230%.
Anaergia CFO Andrew Spence said during the earnings call that “substantial doubt exists about (the company’s) ability to continue,” despite efforts from management — including an executive restructuring — to improve profitability.
Hodson pointed to the Chapter 11 bankruptcy filing in May from the company’s Rialto Bioenergy Facility near Los Angeles as having a significant effect on the company’s financial results.
As well, Hodson highlighted the manifestation of some financial risks surrounding six in-process Anaergia facilities in Italy. Days after the earnings call, Anaergia announced the sale of those facilities to lender Arjun Infrastructure Partners based on the failure to secure financing to complete the projects.
Before the results were reported, Anaergia already had begun a previously disclosed strategic review approved by its board of directors, a plan that involved an executive leadership change and the appointment of both Hodson and Spence in their respective executives this summer.
Here in Michigan, Anaergia secured a $5 million grant from the Michigan Public Service Commission to support the development of the Kent County Bioenergy Facility, which would convert organic waste into renewable natural gas and fertilizer.
As well, state lawmakers allocated $5 million for the overall business park in the state budget around the same time.
The total cost of the business park is estimated at $380 million, with 20% being funded by the county and 80% being funded from the partnership with Anaergia, per earlier reporting. DPW has said it would retain ownership of the facility with Anaergia building and operating the plant.
While executives in Anaergia’s earnings call did not specifically address the Kent County project, Hodson commented on a new shift for the company when it comes to financing any future Build-Own-Operate projects.
“For all new Build-Own-Operate opportunities in the development pipeline, we plan to develop future projects with a financial partner who will fund all or the majority of the capital in these projects,” Hodson said during last month’s earnings call.
According to DPW, the initial phase of the Kent County Sustainable Business Park requires $23 million in infrastructure improvements to be funded through grants and other sources.
Baas told Crain’s Grand Rapids in July that the county was working on bids for some of the infrastructure components in the hopes of having the bioenergy facility fully operational by early 2027, three years later than the department’s hopes for operations beginning in 2024 as reported in 2021.
“We’re at nearly 100% design … we’re making great progress. We’re all but ready — we just need to have that anchor tenant,” Baas said in July, referring to the bioenergy facility.
It is now unclear when county commissioners will vote on the project.
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