Money runs out to fix Tansterne Biomass plant Solar 21 had hoped to sell for £100m

The decision by the new management of the troubled Rathcoole, Co Dublin-based renewable energy firm to abandon the plan to sell its Tansterne Biomass plant is a major blow to the hopes of thousands of Irish investors in Solar 21.

Management also indicated that it has begun a new fundraising round and that it will need to raise as much as £19m (€22.3m) to salvage some of the value of the plant as well as pay back a more than £7m loan from a firm owned by Solar 21 co-founder Andrew Bradley.

The sale of the Tansterne plant after recommissioning and successful operation of it for six months was a central plank of that scheme. Failure to sell the plant as operational could leave the firm with a gap of at least £70m in the scheme of arrangement approved by the High Court last November.

At the time, Solar 21 had told the High Court that, once recommissioned and fully operational for six months, the estimated value of the Tansterne plant was £96.5m. It claimed it had received a non-binding offer at the time from an unnamed party for Tansterne of £116.9m.

But the new report by Alvarez & Marsal – the London-based turnaround specialist supervising Solar 21’s restructuring – said that management now believes it is “unlikely that sufficient funding will be available” for the recommissioning programme that would allow it to be sold as a fully operational and working plant.

While some elements of the recommissioning plan have been progressed, no material progress had been made

The report said that technical issues experienced during the recommissioning process had caused delays and additional costs before it was paused in February “to preserve cash whilst management assessed its strategic options”.

It said that the management of GB-Bio – the Solar 21 group company that owns the plant – had stated that while some elements of the recommissioning plan have been progressed by the on-site maintenance team, no material progress had been made during this period “as the commissioning team is not on site”.

The total recommissioning spend to date had been £11.6m, said the report. Management estimates that additional funding of up to £13.5m would be required to complete, operate and sell the asset. The original estimate for recommissioning in the High Court-approved scheme was £7m.

Instead of the plan to fix and sell the plant as fully functional, management now intends to pursue two other options “in parallel”. It has commenced an external fundraising process to allow for “sale of the plant after completing the recommissioning but before commencing operations”, said the report.

But management has also asked EY to commence marketing of the asset in its current state “in case new funding cannot be obtained before the current liquidity is exhausted”.

Solar 21 claimed it had received a non-binding offer at the time from an unnamed party for Tansterne of £116.9m

That sales process is expected to be complete by the end of August.

“There is uncertainty regarding whether GB Bio will be able to raise sufficient funding to allow it to restart recommissioning,” said the report.

“Given the current cashflow forecast, there is unlikely to be sufficient time to execute a fundraising process followed by a sales process if the fundraising process is unsuccessful.”

The latest update report – the third and gloomiest since outside experts were appointed to try and salvage money for investors – said that recommissioning activity at Tansterne “remains paused due to insufficient funding to restart the work.”

“We understand the plant and machinery is being preserved and the site is being maintained in this period,” it said.

Management has finalised its estimate of the funding required to complete, operate and sell the plant and the analysis had found that it required between £10.7m and £13.5m, in addition to the £11.6 million that has already been spent on the recommissioning.

“In this scenario, management does not intend to raise sufficient finance to operate the plant following the recommissioning,” said the update report.

A new fundraising process is seeking an additional £19m of third-party funding to complete the recommissioning

Management estimates there is sufficient cash available to remain in a paused state until August 31, 2024 and the new fundraising process is seeking an additional £19m of third-party funding to complete the recommissioning, said the report.

Of that amount, £7.6m is needed to repay an existing loan from Greenzone Consulting, the firm owned by Andrew Bradley, the brother of former Solar 21 CEO Michael Bradley.