Milbank LLP advised Gevo, Inc. (NASDAQ: GEVO) (“Gevo”) in connection with a $68,155,000 green bond offering to finance the construction of Gevo’s renewable natural gas (“RNG”) project in Northwest Iowa and with an associated letter of credit facility for Gevo with Citibank, N.A. The tax-exempt bonds were issued by the Iowa Finance Authority on April 15, 2021.
When fully operational, the RNG facility is expected to generate approximately 355,000 MMBtu of RNG per year by digesting dairy cow manure, a renewable resource. Anaerobic digestion of dairy manure by the project will help reduce emissions of methane emitted from existing manure lagoons and avoid emissions of CO2 diverted from land application.
The bonds plus equity investments by Gevo will fund the construction of the biogas facility, comprised of the anaerobic digesters at dairy farms, biogas gathering pipelines, and a centrally located system that will upgrade the biogas to pipeline quality natural gas and interconnect to an existing interstate pipeline. Construction is expected to begin shortly and start-up is expected in early 2022. RNG sale revenues are expected to benefit from California’s Low Carbon Fuel Standard (LCFS) program and the U.S. Environmental Protection Agency’s Renewable Identification Number (RIN) program. Some RNG may be used by Gevo as process energy in its planned Net-Zero 1 Project to produce liquid hydrocarbons in the form of renewable jet fuel and renewable gasoline or in Gevo’s other future projects. The feedstock for the RNG project will be supplied by dairy farms located in Northwest Iowa totaling over 20,000 milking cows.
Milbank Global Project, Energy and Infrastructure Finance partner Allan Marks commented, “The RNG project is the first step in an integrated value chain that will result in sustainable farming and reductions in agricultural greenhouse gas emissions on the front end and innovative, renewable biofuels downstream, especially when coupled with Gevo’s broader Net Zero strategy. At Milbank, we are seeing first-hand the shift in capital toward innovative, clean energy investments. Mitigating climate change can add value both for investors and for the environment. It is a pleasure working with the team at Gevo on the development and financing of this new project.”
The Milbank team for the green bond financing was co-led by Allan Marks and Global Capital Markets partner James Ball, along with Global Project, Energy and Infrastructure Finance associates Anya Andreeva, Javad Asghari, Sharaf Islam, Lucy Stanley and Laura Verlangieri and Capital Markets special counsel Teresa Chen with associates Jasmine Khaneja and Janelle Vacchiano.
Milbank LLP continues to have the lead legal role in a number of renewable energy financings globally. The firm is top-ranked for numerous Project Finance categories by Chambers and was recently recognized as “North America Legal Advisor of the Year” at the Proximo Awards and received awards for “North America Portfolio Power Deal of the Year - Clearway Solar Triple” and “North America Wind Deal of the Year - Western Spirit Portfolio.” The firm has also advised on a number of recent green bond offerings, including Canary Wharf Group (“CWG”) on its £906.3 million (equivalent) debut green bond offering, InterEnergy in the landmark first-time issuer Rule 144A green project bond financing, a bank/bond financing by EnfraGen Energía Sur, S.A.U., Prime Energía SpA, and EnfraGen Spain, S.A.U., valued at US$1.76 billion and the inaugural green bond offering by FS Bioenergia.
