Uncertainty over future of Donegal biogas plant backed by £9.3m Invest NI loan
THE future of an Invest NI-backed anaerobic digestion plant in Co Donegal looks uncertain after it emerged that private investors want to sell it off rather than support a turnaround plan.
Invest NI provided a £9.3 million loan to the Glenmore Project in Ballybofey in 2016 as part of a plan to turn 25,000 tonnes of poultry litter per year from the north into energy.
The loan, offered through the Sustainable Use of Poultry Litter (SUPL) scheme, was provided to Glenmore Generation Limited (GGL), registered in Sion Mills, Co Tyrone.
The company is ultimately owned by Connective Energy Holdings, headed by Donegal businessman Karol McElhinney.
Mr McElhinney previously owned the Herdman’s Mill site in the Co Tyrone village and in 2017 bought the Grianán Estate on Lough Swilly, one of Ireland’s biggest organic farms,” for €17.5m.
The remainder of the funding for the £23m Glenmore anaerobic digester in Ballbofey came from a commercial loan from SQN.
The private equity company subsequently provided additional funds for the project.
MLAs in Stormont’s Economy Committee were last week informed that Invest NI had been in the process of developing a business case to support “a turnaround” of the project.
But a finance report presented to the committee revealed that the lead private investor had advised Invest NI they would seek shareholder approval for the project to be sold rather than supporting the turnaround plan.
“The promoter agreed to accept this approach on 11 August to avoid administration,” according to the report.
“There is no guarantee this sales process will be successful and in the worst case scenario, Invest NI will receive nil.”
The risk to the loan required the Department of Finance to secure an assurance from the Treasury that it provide cover for a potential £10m expected credit loss.
A spokesperson from Invest NI said: “The loan has not been written off to date, but under accounting standards we are required to account in year for any expected credit loss (ECL).”
“The GGL Board is considering all options in order to maximise the return to investors and pursue the project’s renewable energy goals, including the potential refinance of the business.
“However, due to the commercial sensitivities around this process, we will not be able to comment any further on this process at this time.”
The Department for the Economy (DfE) has confirmed that the Treasury will cover a total of £31.2m in expected credit loss (ECL) stated in its accounts.
It includes an ECL of £18.5m relating to the Presbyterian Mutual Society (PMS).
A spokesperson for the department said: “Following receipt of the financial projections to March 2022 from the PMS joint supervisors, detailing expected shortfalls and fall in the value of the investment properties over the last 12 months, DfE recognised an ECL under IFRS 9 of £18.5m.”
However, he added: “Not all of these losses will materialize.”