19 Dec 2017

Stephenson Harwood advises Covanta Holding Corporation on strategic partnership with Green Investment Group

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Law firm Stephenson Harwood LLP has advised Covanta Holding Corporation (Covanta) on a strategic partnership, structured as a 50:50 joint venture, with Green Investment Group (GIG), a subsidiary of Macquarie Group Limited. The partnership will develop, fund and own energy-from-waste (EfW) projects in Ireland and the UK.

Covanta is a world leader in EfW. It has a portfolio of 43 facilities capable of processing more than 18 million tonnes of waste per year, while generating up to 1,499 MW of renewable energy. GIG targets investments in green infrastructure projects across both established and emerging technologies in the UK.

The initial step in this partnership is GIG's investment in Covanta's Dublin plant through the JV. The purchase price for this project implies a total enterprise value of approximately €700 million.

"This strategic partnership represents a seismic change in Covanta's growth trajectory," said Duncan Stiles, partner, Stephenson Harwood. "We have a proven track-record of supporting US firms on strategically important investments into the UK, and were pleased to be able to work with Covanta again to enable it to deliver on its international development ambitions. We look forward to continuing to work with Covanta as it develops its UK pipeline, including in relation to the Rookery South EfW project, where we are advising Covanta directly on its partnership with Veolia."

"This is a transformative deal for Covanta, and positions us alongside GIG to make the most of the significant opportunities afforded to us in the UK and other international markets," said Tim Simpson, general counsel, Covanta. "We are grateful to the Stephenson Harwood team, whose understanding of the EfW sector, and experience advising in relation to complex, cross-border transactions, led to genuinely insightful, commercially-focused advice. We look forward to continuing to work with them."

Subsequently, Covanta and GIG will combine their respective UK development pipelines, each comprising three projects, for joint development and eventual acquisition by the JV. In total, the six projects will provide two million tonnes of annual waste processing capacity across the UK. The four advanced projects forming part of the development pipeline have a total estimated capital cost of US$1.6 billion, with total equity funding of the JV expected to be US$300 million to US$400 million.

The Stephenson Harwood team was led by head of corporate finance, partner Duncan Stiles, who was assisted by corporate associates Chris Cowley, Marina Pappas and Mohammed Basama, with partner Maryanna Sharrock and senior associate Hilary Barclay providing tax advice.

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