Jul 7 2010
ADA-ES, Inc. (NASDAQ: ADES) announced that Clean Coal Solutions, LLC (“CCS”), its joint venture with NexGen Refined Coal, LLC (“NexGen”), an affiliate of NexGen Resources Corporation, has signed agreements with a large financial institution to lease two CyClean facilities that produce Refined Coal that is intended to qualify for Section 45 tax credits.
The two systems are installed at two different power plants in the Midwest each of which operates two cyclone boilers burning Powder River Basin (“PRB”) coal from Wyoming. The lessee has entered into agreements with the power plant owner to supply Refined Coal for use as feedstock in the boilers. With all four boilers operating, the units are expected to burn approximately 6 million tons of Refined Coal per year that will qualify for the approximately $6.20 per ton of federal tax credit, which are available for the next ten years.
The leases of the two CyClean facilities provide for a $9 million cash payment to CCS for Pre-paid Rent in addition to future Fixed and Contingent Rent payments that are expected to generate approximately $2/ton of operating income to CCS over the terms of the leases. These installations trigger up to $4 million in payments by NexGen to ADA for NexGen to maintain its 50% ownership of CCS, which is to be paid out of CCS’s cash distributions payable to NexGen.
Mike Durham, President and CEO, stated, “We are very excited about completing these transactions and getting these two systems up and running. They are expected to provide significant cash flows for ADA over the next ten years. In addition, they enable us to provide a power generating customer with economic benefits resulting from the use of the technology, including increased fuel flexibility, decreased operating costs, and decreased emissions of NOx and mercury.”