The AIM-listed low-carbon fertiliser developer has secured financing from a consortium of development finance institutions for its flagship $650 million project
ATOME PLC (AIM:ATOM), the AIM-listed low-carbon fertiliser developer, has signed definitive debt financing agreements worth $420 million for its planned fertiliser plant in Villeta, Paraguay, marking a significant milestone for a project it describes as the largest of its kind independent of fossil fuels.
The documents were signed on 12 March at the annual meetings of the Inter-American Development Bank Group (IDB Group) in Asuncion, the first such gathering to be held in Paraguay since 2017.
The debt package spans fifteen years and has been provided by a consortium of five development finance institutions, including IDB Invest, the private sector arm of the IDB Group, and the International Finance Corporation (IFC), part of the World Bank Group.
Also backing the project are the European Investment Bank (EIB), the lending arm of the European Union; FMO, the Dutch state-backed entrepreneurial development bank; and the Green Climate Fund (GCF), established under the United Nations Framework Convention on Climate Change.
Around 25% of the debt has been provided on concessional terms, meaning below-market rates, which ATOME said would materially reduce its overall cost of capital and improve project returns.
The $650 million Villeta plant is designed to produce 260,000 tonnes of low-carbon fertiliser per year, using renewable energy rather than fossil fuels.
ATOME said the plant would benefit from a long-term, fixed-cost power supply and is situated within one of the largest fertiliser markets in the world.
The company has a long-term take-or-pay offtake agreement with Yara International, the Norwegian fertiliser group, covering all of Villeta’s production, with price-protection mechanisms and the potential for a premium above market prices.
The remaining $244 million of the project’s funding will come from equity, and Atome said the definitive equity agreements are expected to be signed within 30 days.
As part of the equity arrangements, Atome is expected to provide management services to the project company, including the chair, chief executive and project director roles on a remunerative basis.
Peter Levine, chair of ATOME, said the project would be “a game-changer for the fertiliser sector, particularly in the increasingly important South American region.”
The company said recent geopolitical events had underlined the strategic value of a fertiliser supply chain independent of fossil fuels at a time of heightened concern over food security and energy price volatility.
ATOME said the lenders were expected to make their own separate announcements during the course of the day, with a further announcement on the equity arrangements to follow in due course.