Bonollo Energia Case

Additional Material
Agenda

1. The Bonollo Project

2. Who Does What When?: The Contractual Network
3. Cash Flows
4. Incentives At Work: Focus On Bonollo’s Multiple Roles

This additional clip is designed for those participants

who want to analyze more in details sector specific projects.
It won’t be part of the final evaluation.
The Bonollo Project
Construction and running of a biomass plant to be annexed onto the already existing
Bonollo Distilleries factory.
Some quick facts:
– Anagni Paduni (FR), Italy, Mid 2007
– 10 MW installed capacity, equivalent at regime to 83,000,000 kWh/yr
– Total project cost: About 64 million €
– Total equity contribution: About 10 million €
• Debt/Equity ratio (VAT loan excluded): 4x
The Bonollo Project
Objectives:
– Usage of the sub products of the distilleries as biomasses for the production in
cogeneration of electric and thermal energy to cover the distilleries power needs,
respectively 18,000,000 kWh/yr of electricity and 125,000 t/yr of steam;
– Sell the excess electric capacity on the national electricity transmission grid:
Approximately 57,750,000 kWh/yr (which is equivalent to the domestic consumption of
about 20,000 households); and
– Diversify of the sources of electric energy (100% renewable).
The Bonollo Project
Construction phase: 2 years (January 2009 – December 2010)
Start-up Phase: 6 months (January 2011 – June 2011)
Uses of Funds € mil. Sources of funds € mil.
Cost of Plant 46.79 73.28% Equity 10.50 16.44%
Direct Costs - 0.00% Loan Base Facility 41.00 64.21%
External Costs 0.79 1.24% Loan VAT Facility 9.00 14.10%
Total Investment 47.58 74.52% VAT Refund - 0.00%
DSRA 1.47 2.30%
Financial Charges 5.80 9.08% Self financing 3.35 5.25%
VAT Charges 9.00 14.10%
Total Uses 63.85 100% Total Sources 63.85 100.00%
The Bonollo Project
Project Finance: approx. 20% equity 80% debt
• Equity: 50% Bonollo Distilleries; 50% Alerion Cleaner Power
• Debt: Syndicated loan Syndicate role Bank
Mandated Lead Arranger GE- Interbanca
Underwiters 40% GE- Interbanca
Security Package
20% MPS Capital Service
Mortgage on land
20% Banca Popolare dell' Etruria
Pledge of Bonollo Energia shares 20% Centrobanca
Pledge of deposits Hedging bank GE- Interbanca
Assignment of receivables Agent Bank GE- Interbanca
Assignment of insurance payments Depositary Bank GE- Interbanca

Amount Tenor Drawdown Repayment LLCR DSCR

€ mil. years period period min avg max min avg max
Base Facility 41.00 15 Jan 09 - Dec 11 Jun 12 - Dec 23 1.60 2.07 3.94 1.40 1.43 1.55
VAT Facility 9.00 5 Jan 09 - Dec 10 Jan 11 - Dec 13
 Who Does What When?
The contractual network:

Insurance Public Adm. Bank

Authorizations
Syndicate 50% Bonollo Distilleries
Insurance Policies /permits No-recourse loan 50% Alerion
Equity contribution
agreement
National Energy sale
BONOLLO
electricity Market
ENERGIA (SPV) Biomass sale agreement Bonollo
Distilleries

EPC contract
Service contract for O&M agreement Bonollo Distilleries
Steam & power
energy and green Alerion
purchase
STC certificate sale
agreement

Alerion Clean Bonollo

Power Distilleries
Cash Flows
Construction phase:
Insurance Bank
Syndicate 50% Bonollo Distilleries
Insurance Premiums Base Facility 50% Alerion
VAT Facility
Equity

BONOLLO
ENERGIA (SPV)

Fixed Price

EPC contract incentive mechanisms:

STC • Payment terms: Fixed price is paid in installments at well
defined construction milestones
• Penalty clauses: Defined in terms of timing and performance
• Performance bonds for sub-optimal performance or late delivery
• Warranty bonds to guarantee plant capacity
• Rejection clause
Cash Flows
Operational phase:

Insurance Bank
Syndicate 50% Bonollo Distilleries
Insurance Premium Debt service 50% Alerion
Dividends

National BONOLLO
electricity Market
ENERGIA (SPV) Cost of supply
Poceeds from Bonollo
energy sale Distilleries

Service fee O&M fee Bonollo Distilleries

Proceeds from
energy sale Alerion

Alerion Clean Bonollo

Power Distilleries
Incentives at Work
Focus on Bonollo’s multiple roles:

50% Bonollo Distilleries ü Get  dividends;

Equity contribution
agreement
BONOLLO
ENERGIA (SPV) Biomass sale agreement Bonollo
Distilleries ü Sell  sub-­‐product  of  
distillation  process;
O&M agreement
Steam & power Bonollo Distilleries
purchase ü Control  and  run
agreement

Bonollo
the  facility;
Distilleries ü Get stable and  
green  energy.