Morrison & Foerster LLP has advised CalAg, LLC and CalPlant I, LLC in connection with equity and debt financing of the construction and operation of an industrial facility in Northern California that will manufacture medium density fiberboard (MDF) using rice straw as feed stock, and will be the first such facility in the world.
Equity investments in the project are being made by a subsidiary of TIAA (Occator Agricultural Properties, LLC), Zelman Capital CalAg LLC, Columbia Forest Products, Inc., and Siempelkamp Maschinen- und Anlagenbau GmbH. Siempelkamp is a German equipment manufacturer and will be the equipment supplier for the project. The debt for the project is being provided by the proceeds of tax-exempt bonds issued by the California Pollution Control Finance Agency, and underwritten by Stifel, Nicolaus & Company and Citigroup Global Markets Inc. The total debt and equity investment in the project is expected to be approximately $315 million.
The structure of the deal and the concept of the project is significant in a number of ways. Environmentally the project is significant because there is no other commercial use for rice straw, and disposing of it is expensive and water intensive. Financially the project is significant because it is unusual for a start-up company to be able to obtain project financing and then to finance a project with tax exempt bonds. Technologically the project is significant because the process is innovative for the wood product industry. Legally the project is significant because of how the parties involved hold their respective rights in the intellectual property.
Irv Hepner, a Los Angeles-based MoFo Finance of counsel, led the team, which also included partners Suzanne Graeser (Palo Alto), Peter Dopsch (NY), and Shane Shelley (San Diego); senior of counsel Kenneth Kohler (LA); and associates Huilin Wang Cornell (LA), Phillip Kim (LA), Amanda Myers (LA), Meagan Froemming (LA), Julia Balas (LA), Jacqueline Tam (Palo Alto), Leanne Ta (SF), Justin Haan (SF), and Adam Nguyen (SF).
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