8 December 2010
After having set up biogas plants in Europe for years, Bigadan was given the opportunity to penetrate the US market through two American business partners.
In the US, however, biogas is still a new technology for which it is difficult to obtain traditional financing. Furthermore, Bigadan entered the market in 2008 just as the financial crisis took hold for real which made the banks less inclined to participate in the project, in spite of the good chances of selling the energy derived from the equipment.
“Our biggest challenge was to find proper financing for the project at a time when the financial market was facing a meltdown. It turned out to be impossible to obtain any kind of financing from the banks”, says Karsten Buchhave, CEO of Bigadan.
EKF was contacted by Bigadan who needed help to set up more biogas plants. During the initial stage the emphasis was on establishing a single biogas unit worth USD 5.8 million to be used as a reference in the United States. American as well as Danish banks refused to share the project risk due to a combination of the financial crisis, the limited size of the project and American scepticism towards the technology.
EKF was, however, prepared to give the project a chance and carried out the entire project phase with investigations and negotiations with lawyers, bank, technicians and partners, an assignment which is normally undertaken by the bank involved.
On the basis of the investigations EKF offered to take on the entire risk of a 15-year project financing transaction involving a 100 pct. guarantee. Bigadan´s Danish bank, Sparbank, was thus prepared to lend the money to the project which allowed Bigadan and the two American partners to launch the project.
“EKF has been determined to make the project work and succeed. I´m optimistic and full of expectations towards future projects”, says Karsten Buchhave, CEO of Bigadan. He adds,
“The project in the United States is of great importance to Bigadan´s chances. We have introduced a new project model in which we build, own and run the project combined with a guarantee from EKF. This model can kick-start our entry into the United States which may well turn out to be our biggest market”
The biogas plant is expected to be in operation from the end of 2011 and Bigadan has already initiated negotiations for several more new plants in the United States.Facts
Who: Bigadan A/S
No. of employees: 25
What: Biogas equipment for the agricultural sector in the United States
How much: USD 5.8 million
EKF’s role: Prepared the entire project and arranged the financing with 100 pct. guarantee.
EKF products: Project financing