Company officials and observers say the investment improves Plasco’s long-term sustainability and allows it to scale up production in response to growing global demand for alternative solid waste disposal systems.
“It’s extremely significant to our company,” said Plasco chairman and CEO Rod Bryden in an interview Wednesday.
“From a technical and market demand point of view, we’ve been ready to roll this product out for the last few months but without sufficient capital to do that.”
Los Angeles-based Ares Management LLC is contributing $100 million in exchange for slightly more than a one-third ownership stake, said Mr. Bryden. Another $10 million came from other investors, most of whom already have a stake in the company, he said.
When combined with previous equity investments, as well as several relatively modest government grants and loans, Plasco has now raised approximately $270 million.
Mr. Bryden said Plasco will be seeking another $20 million to $30 million before the end of the year to ensure it has sufficient working capital to meet customer demand.
The company’s plasma gasification technology converts municipal solid waste into electricity, clean water and clean aggregate.
Along with developing the technology, Plasco’s business model involves producing, delivering and integrating the system at the customer’s site and then training the client on its operation, said Mr. Bryden.
The company currently operates a demonstration plant, capable of processing 100 tons of waste daily, at the Trail Road landfill in Ottawa. It also jointly owns and operates a five ton-per-day research facility in Castellgali, Spain, with Hera Holdings and has signed a contract to build a 300 tonne-per-day facility in Red Deer, Alta. that is scheduled to be completed by 2012.
Company officials participated in a trade mission to China earlier this year with other Ottawa business and political leaders.
Plasco’s presence generated a “very positive” reaction from Chinese officials, recalled Claude Haw, the CEO of the Ottawa Centre for Research and Innovation who was part of the delegation.
“I think the world is going to beat a path to Plasco and Ottawa to get access to this great technology,” he said Wednesday.
“The world needs this. Management of waste is a massive problem … exacerbated in any place where population density is high.”
Mr. Haw said more than a half-dozen Chinese contingents have visited Ottawa since the April trade mission and several visited Plasco’s demonstration facility. When a company like Plasco markets its products globally, it’s also marketing Ottawa as a clean-tech hub, he added.
Mr. Haw said the investment will send a positive signal to would-be customers.
“By having sufficient equity, they are saying to the world, ‘We’re here for the long term.’”
He argued Plasco actually benefits from strict domestic government environmental and safety regulations because foreign customers know the technology is meeting tough Canadian standards.
In May, reports said the provincial government was still concerned about the exhaust levels coming from Plasco’s demonstration plant that have resulted in frequent shut-down periods because pollutants exceeded regulatory limits.
At the time, Mr. Bryden said he was confident the problems could be resolved and that Plasco would not sign a contract with the city for a full-scale plant until it satisfies provincial regulators, according to reports.
On Wednesday, Mr. Bryden said the company will update Ottawa residents “in the next short while” on the Trail Road plant and announce “a further step forward.”