MILNER 2 Expansion
Maxim Power enters engineering contract to expand M2
2021-06-30 21:44 ET - News Release
Mr. Bob Emmott reports
MAXIM POWER CORP. ANNOUNCES MILNER 2 CCGT PROJECT EPC CONTRACT AND FINANCING ARRANGEMENTS
Maxim Power Corp. is proceeding with the corporation's project to expand M2 into a combined cycle gas turbine (CCGT) facility through the installation of heat recovery technology. The CCGT expansion project is anticipated to increase total generation capacity from 204 MW to approximately 300 MW and improve operational efficiency resulting in lower operating and maintenance costs per MWh. The current estimated cost of the CCGT expansion project is $125 million before financing costs. MAXIM anticipates the expansion will commence commercial operations during December 2022.
The CCGT expansion project is being financed with debt, existing cash, and cash flow from operations during the construction period. As of this date, MAXIM forecasts it will have sufficient liquidity to complete the CCGT expansion project.
EPC Contract
MAXIM, through a wholly owned subsidiary, has entered into an Engineering, Procurement, and Construction ("EPC") contract for the CCGT expansion project. The EPC Contractor is a joint venture between PCL Industrial Management Inc. and Overland Contracting Canada Inc., a Black & Veatch company, who are the same parties that constructed the existing M2 simple cycle plant. The EPC Contractor has agreed to complete and deliver the expanded plant as a fixed-price, turn-key project. The EPC contract value is approximately $86 million and the remaining cost of $39 million are owner's costs for activities that MAXIM is responsible for.
M2 will continue to operate in simple cycle mode during construction. Commissioning of the expanded facility is expected to occur over a 3-month period during which there will be periodic outages of the existing M2 plant while work is carried out to connect this plant to the heat recovery technology.
Financing Arrangements
MAXIM has amended its senior secured credit facility. The amended senior secured credit facility has been arranged by ATB and Fiera Private Debt and the aggregate borrowing base thereunder has been increased to $105 million to provide for construction financing, of which $28.5 million is currently drawn, $62.4 million is available for construction and the remainder available for general corporate use and letters of credit. The construction facilities of up to $62.4 million consist of two non-revolving construction loans and a $5 million revolving credit facility. The construction loans have amortization requirements ranging from five to ten years commencing when construction of the CCGT expansion is complete. All loans under the senior secured credit facility mature on June 30, 2026.
MAXIM has also extended the maturity date of its current subordinated convertible secured credit facility to provide additional construction financing, if needed. Total capacity under this credit facility is unchanged at $75 million of which $29.4 million is currently drawn. This facility matures on September 25, 2026.
About Maxim Power Corp.
Based in Calgary, Alberta, MAXIM is one of Canada's largest truly independent power producers. MAXIM is now focussed entirely on power projects in Alberta. Its core asset -- the 204 MW H.R. Milner Plant ("M2"), in Grande Cache, AB -- is a state-of-the-art natural gas-fired power plant that commissioned in Q2, 2020. MAXIM is currently increasing the capacity of M2 to approximately 300 MW and concurrently will realize an improvement in the efficiency of the plant by investing in heat recovery combined cycle technology. In addition, MAXIM continues to explore additional development options in Alberta including its currently permitted gas-fired generation project and the permitting of its wind power generation project. MAXIM trades on the TSX under the symbol "MXG".
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