US Najafi eyes acquisition of troubled biomass power plant
(ADPnews) - Sep 17, 2010 - US private equity firm Najafi Companies said on Wednesday it intended to buy a bankrupt biomass power facility in east-central Arizona for USD 4.75 million (EUR 3.6m).
The proceeds from the sale will be used to repay the USD 11.8 million, which the plant owns to CoBank ACB of Greenwood Village.
The plant, whose asset value currently stands at some USD 64 million, produces power through the burning of wood chips and paper sludge from a neighbouring paper mill. It opened in the summer of 2008, but was put up for sale after operating for less than a year and is now 99%-controlled by the State Street Bank of Boston. In April, the facility was placed under the control of a receiver appointed by the court after it defaulted on loan payments and experienced other financial troubles. In July it filed for Chapter 11 bankruptcy protection.
Najafi said it would eventually spend on the plant a lot more than the purchase price. It is looking to struck an agreement quickly as the plant's wood-chip fuel is nearly exhausted and it should fetch new supply before the winter season.
According to court documents, there are 39 companies who are interested in buying the facility. They will be able to bid for it on the bankruptcy hearing on October 1.
In 2009, Najafi announced it planned to pursue new alternative energy projects for up to USD 100 million. In 2008, the company acquired another bankrupt firm -- residential construction firm Trend Homes.