It sounded like a promising clean tech investment for California – a revolutionary plant in the Sacramento Valley that would turn rice straw into fiberboard.
State officials were so enthusiastic they helped finance the fledgling plant with more than $ 300 million in tax-exempt bonds, believing the project would create jobs in the heart of California rice country while helping to reduce greenhouse gases emitted by rice straw. The bonds did not put state taxpayers at the mercy of the company’s financial woes.
Now the plant filed for bankruptcy.
CalPlant I LLC, which operates the Willows, Glenn County plant, filed for a Chapter 11 reorganization on Tuesday. The private company said it would use bankruptcy to restructure its debt and seek a buyer.
Filing Chapter 11 in US bankruptcy court in Delaware doesn’t mean the state has lost its money. The California Pollution Control Funding Authority, a branch of the office of the state treasurer, Fiona Ma, provided the company with the state tax-exempt borrowing capacity.
Although the authority issued the bonds to build the plant, “there is no risky taxpayer funds,” Ma spokesperson Noah Starr said.
According to the Wall Street Journal, municipal bond funds are among the company’s largest lenders, which employs more than 125 workers.
The Pollution Control Finance Authority approved nearly $ 344 million in tax-exempt “green bonds” for the company between 2017 and 2020, testifying to CalPlant’s stature as a technology company clean. The company qualifies its product as “The first in the world Medium density fiberboard made from rice straw with no added formaldehyde.
According to official documents, the company said turning rice straw into fiberboard would remove 1.2 million tons of greenhouse gases that are normally emitted when the straw breaks down after harvest. That’s “the equivalent of taking about 270,000 cars off California roads each year,” the company told the state agency.
Jeffrey Wagner, the company’s executive chairman, blamed startup problems and the COVID-19 pandemic on CalPlant’s bankruptcy.
“The road to full commissioning of our factory has not been easy,” he said in a press release. “We started commissioning our facility in early March 2020, then the pandemic struck. Suddenly, the usual challenges and delays associated with a startup got worse. “
The company lost $ 21 million last year, according to a bond document.
Three months ago, at its board meeting in July, the authority approved $ 18 million in additional funding for CalPlant, bringing total state-supported funding to over $ 360 million. Company president Jerry Uhland told the board that the funding was “vital to the success of the plant,” according to the meeting minutes.
However, the company was already in serious financial difficulty. Public bond documents show that the company started to default on his debts In early June.