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I , I 1114J..lze Ross t:..Gl IV. PROJECT FINANCING The New Brighton waste-to-energy facility is assumed to be owned by a limited partnership that would contribute 40% of the required capital. The remaining 60% of capital will be financed through a public offering of tax-exempt bonds with a 14% coupon rate. The bonds are assumed to have a twenty-two year term. During the first two years, the construction period, interest-only payments will be made. The bonds are repaid over the remaining 20 years using level debt service payments. The underwriting fee for making the bonds is assumed to be 5% of the total bond issue. A debt service reserve is required by the financing community for the funding of new high risk enterprises such as waste-to- energy facility. The underwriters require a minimum cash reserve to insure future debt repayment. A reserve equivalent to 100% of the annual level debt service payment is assumed. The total capital necessary to fund the project through the 1985 start-up operations and to fund the debt service reserve is $10,504,000. Total capital is composed of $6,302,000 in debt finanfing and $4,202,000 in equity capital. Project financing and application of funds is summarized as follows: SOURCES AND USES OF FUNDS NEW BRIGHTON WASTE-TO-ENERGY FACILITY Project Financing Equity Capital Debt Capital Total Capital $ 4,202,000 6,302,000 $10,504,000 Funds Applied Capital Expenditures Capitalized Interest Fi nanci ng Cost Start-up Interest Expense Construction and Start Up Operating Expense Working Capital Debt Service Reserve Total Funds Applied $ 8,136,000 133,000 315,000 439,000 362,000 152,000 967,000 $10,504,000 - , 1 -