Hybar, a newly formed company, has raised US$700 million of debt and equity financing to build and operate a state-of-the-art, energy-efficient rebar steel mill in Osceola, Arkansas.
KfW IPEX-Bank is providing a loan of up to US$150 million to fund the project.
The equity portion of the financing was led by TPG Rise Climate, the dedicated climate investing strategy of TPG's global impact investing platform TPG Rise, and Global Principal Partners, the investment entity used by Hybar's senior management team.
Of the US$700 million raised, US$470 million will be spent on building the mill, while the remainder will be used to start up and operate the plant and pay certain debt service costs during construction.
The mill, which is expected to take 22 months to construct, is being built in northeast Arkansas on a 1,300-acre greenfield site with direct access to barge, rail and truck transportation options.
It will produce a full complement of high-yielding rebar that will primarily be used in large infrastructure projects, including projects supported by the Infrastructure Investment and Jobs Act and the Inflation Reduction Act.
The mill will use state-of-the-art, low-emission and energy-efficient steelworks technology, which is supplied by SMS Group with a high share of added value from Germany. The portion of the funding for this purpose will be covered by German export credit insurance company Euler Hermes.
The mill has a very low CO2 footprint, cutting emissions by up to 50% compared with other leading rebar steel mills. It will be directly connected to a neighbouring solar park to enable operation with 100% renewable energy in the future.
“Recycling and the sustainable production of steel play a key role in global decarbonization and the transformation to climate neutrality,” says Velibor Marjanovic, a member of KfW IPEX-Bank’s management board. “We’re delighted to support our new customer Hybar in this flagship project by financing cutting-edge German technology and so underscoring our aspiration to further advance global energy transition projects through the export of European technology.”
Hybar recently priced certified climate bonds amounting to US$300 million, the first-ever transaction to be certified under the Climate Bonds Initiative standards in the steel criteria. Kestrel provided an independent external review to support the designation as certified climate bonds.
Goldman Sachs was lead underwriter, with Atlanta-based Truist Securities and Arkansas-based Crews & Associates acting as co-managers. Cleveland-based BakerHostetler and Los Angeles-based Latham & Watkins served as counsel to Hybar, with Little Rock, Arkansas-based Mitchell Williams serving as local counsel.
