Laidlaw, Cate Street spar over payment
By Melissa Grima
Berlin Sun
Sep 20, 2011 12:00 am
A dispute over payment has broken out between Laidlaw BioPower and Cate Street Capital. On Friday, Laidlaw Energy Group, a publicly traded company and member of Laidlaw BioPower, issued a press release accusing Newco Energy, an affiliate of Cate Street, of failing to make good on a purchase and sales agreement to the tune of about $5 million.
According to Laidlaw Executive Vice President Lou Bravakis, Cate Street made an initial payment of an undisclosed amount to purchase the project from them on August 27, 2010. Bravakis said that first payment was substantially less than the $5 million, which was to be paid at the time of Cate Street's financial closing according to the agreement. “We hinged all our hard work on that payment,” Bravakis said.
That financial closing took place at least two weeks ago and no payment has been received by Laidlaw.
“My colleagues and I spent over four years working on the Berlin biomass project. Long before Cate Street Capital even existed we saw the potential in the former pulp mill to help turn around Berlin's economy though renewable power generation and worked tirelessly to make that potential a reality,” said Bravakis. “I don’t mind the fact that Cate Street Capital has taken all the credit for much of the hard work we have done, but I do object to the fact that they have not honored their clear written agreement with us, have provided no reasonable basis for not doing so, and are forcing us to take extreme measures to collect what is rightly owed to us.”
Speaking for Cate Street Capital, Scott Tranchemontagne of Montagne Communications, would not elaborate the details, saying only, “there's a disagreement in the terms of our agreement with Laidlaw and it's being worked out. It will get resolved.”
According to the Laidlaw press release, that resolution will come through legal channels as they “pursue all remedies available to them, including instituting binding arbitration as provided in the purchase agreement.”
Bravakis added, “The Berlin biomass plant is projected to have a revenue stream of over $1.3 billion over the next 20 years and is also believed to be eligible for a federal cash grant of approximately $82 million due 60 days after the plant commences operations. John Halle and Cate Street Capital purchased a very good project from us and we expect them to honor their agreement with us and pay what they agreed to pay.”
Tranchemontage said the dispute would have no anticipated effect on the project moving forward or the construction schedule. Construction is expected to begin late this month and the 75MW power plant is planned to be online by fall 2013.
Cate Street announced earlier this month that it closed on the financing for the $275 million project securing $200 million in senior notes and $72.5 million in equity. The power plant, when completed, is expected to be the largest in New Hampshire and among the largest in the Northeast, employing approximately 40 people. The construction of the plant is expected to create around 400 jobs.
