Clean Energy Fuels Corp. has entered into a six-year $300m senior secured term loan with Stonepeak, an alternative investment firm specializing in infrastructure and real assets, according to a news release.
The credit agreement also provides for a two-year delayed draw term loan commitment of an additional $100m.
In addition to repaying existing loans, the financing from Stonepeak will provide Clean Energy with capital for new renewable natural gas (RNG) production facilities, as well as the expansion of the company’s fueling infrastructure targeting the heavy-duty truck market.
The term loan bears interest at 9.5% per annum. During the first two years, Clean Energy may elect to pay up to 75% of the interest in kind. The term loan matures on December 12, 2029 and may be repaid by Clean Energy at any time in an amount that results in Stonepeak achieving the greater of (i) 11.5% internal rate of return and (ii) 1.4x multiple on invested capital, subject to certain exceptions. In connection with this transaction, Clean Energy issued warrants to Stonepeak for the purchase of 10 million shares of common stock with an exercise price of $5.50 per share and 10 million shares of common stock with an exercise price of $6.50 per share. The warrants expire on June 15, 2032 and are exercisable at any time after December 12, 2025.
Clean Energy currently provides RNG to hundreds of fleets every day in the form of compressed natural gas (CNG) and liquified natural gas (LNG), which enables them to decarbonize their large vehicles easily and affordably.
“Stonepeak is one of the most well-respected infrastructure investment firms operating in the energy transition space and we’re excited to partner with them as we grow our RNG business,” said Clay Corbus, senior vice president for strategic development and head of Renewable Fuels at Clean Energy. “This financing agreement is very timely as we continue to see more RNG development opportunities come our way, and as we anticipate building additional stations to accommodate increased demand due to the arrival of Cummins 15-liter natural gas engine.”
“We see RNG as a practical and affordable energy solution for the transportation sector, with tailwinds supporting increasing adoptability. This, combined with its ability to curb fugitive methane emissions, makes it a critical part of decarbonization infrastructure, in our view,” said Michael Bricker, Senior Managing Director at Stonepeak. “With its proven asset base and operating history, we believe that Clean Energy has differentiated itself both within this space and relative to earlier stage verticals and other platforms pursuing the energy transition. We look forward to partnering with the Clean Energy team in supporting the company’s next phase of growth.”
Clean Energy is currently developing a portfolio of RNG production facilities at dairies across the country. The first project is producing RNG in Texas and supplying it to the transportation market in Oregon through the state’s low carbon fuels program. Multiple other facilities are in the final stages of completion.
The company is also expanding its RNG fueling infrastructure, which currently includes over 600 stations across North America. This comes at a time when Cummins Inc. is testing a new larger natural gas engine for heavy-duty trucks with companies like Walmart, Werner, Knight Swift, and UPS. These fleets are experiencing an improved fuel economy with more torque and power than previous models, while at the same time dramatically reducing greenhouse gas (GHG) and NOx emissions compared to diesel. The 2024 commercial launch of the Cummins X15N engine is much anticipated by the industry.
