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Colnbrook incinerator gets Bank of Ireland backing

Bank of Ireland Global Project Finance has announced £155 million debt financing for the Lakeside Energy from Waste plant at Colnbrook, near Slough.

This deal makes it the largest ever Private Finance Initiative (PFI) project in the UK to date.

The mandated lead arranger for the deal was Bank of Ireland putting in £40m. The co-arrangers were Royal Bank of Scotland, Fortis, Natexis and AIB at £25m. The lead manager was Mizuho at £15m.

Bank of Ireland Global Project Finance head of infrastructure Andrew Hartley said: “Regulatory pressures, together with Lakeside’s competitive economics and the strong position enjoyed by Viridor and Grundon in the local waste market, presented a compelling case for Bank of Ireland and the syndicate of banks to support this first household waste treatment facility to reach financial close without a major underpinning local authority supply contract.”

The closure of the deal ends a drawn-put process for the development of the project to build the plant.

In 2001, the site was given planning approval for a 411,000 tonnes per year plant for Grundon Waste Management. However, long-term waste supply contracts were proving difficult to secure without certainty of financing at that stage.

Grundon were joined by Viridor early last year to form a 50/50 joint venture for Lakeside. This means 85% of the waste supply has been underwritten by Viridor and Grundon and through a contract with Slough Borough Council.

The remaining 15% capacity will be let to local authorities and their waste management contractors under long-term contracts.

Overall, the cost of the plant is £180m with the remainder coming from equity.

Commissioning of the plant, which will generate around 245 million units of electricity per year, is due in 2008.

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