Capstone Partners has announced that The Bowersock Mills & Power Company of Lawrence, Kansas completed a $23.8 million bond financing for the expansion of its current run-of-river hydroelectric facility located on the Kansas River. The expansion will add 4.70 megawatts of generation capacity to Bowersock’s present 2.15 megawatts, for a total capacity of 6.85 megawatts. Capstone acted as co-advisor on the bond financing with Stern Brothers & Co. of St. Louis, Missouri.
Closing the financing will allow us to start construction and add 4.70 megawatts of clean electricity to the Kansas power supply through the Kansas City Board of Public Utilities. Capstone and Stern Brothers were instrumental in helping us navigate the capital markets to a successful transaction.
The expansion of the Company’s hydroelectric facilities was financed in part through the issuance of $14,060,000 Series 2010A Recovery Zone Facility Bonds, $8,720,000 Series 2011B Qualified Energy Conservation Bonds and $1,035,000 Series 2011C Industrial Revenue Bonds. By structuring the financing through the use of tax-exempt Recovery Zone Bonds and taxable Qualified Energy Conservation Bonds with a federal interest rate subsidy – both created by the Stimulus Act – the long-term cost of capital for the bond issuance remained attractive despite the volatility in the municipal bond markets.
Jerry Sturgill, Managing Director at Capstone added, “The true economic value of this project was validated by the market pricing this deal in a turbulent municipal bond market. It’s a testament to this stellar management team that this got off the ground.”