Mintz Levin Collaborates with US Department of Agriculture to Develop An Innovative Bond Finance Program

03.22.2011 - Washington, DC

USDA Issues Its First Conditional Loan Guarantees in History Based Entirely on Bond Financing And Publishes Its Interim Final Rule And FY2011 NOFA Thereto

Acting upon the significant input of Mintz Levin’s Mark J. Riedy, Stern Brothers' John May, and Krieg DeVault's John Kirkwood, the U.S. Department of Agriculture (USDA) has developed the first loan guarantee program in history based entirely on bond financing with an emphasis on advanced biofuels and bioproducts. In this regard, the USDA issued a series of Conditional Loan Guarantees in early January 2011, published an Interim Final Rule on February 14, 2011 pursuant to 2008 Farm Act Section 9003 for Integrated Biorefineries and published a FY2011 NOFA in the amount of at least $463 million thereto on March 11, 2011.

The Conditional Loan Guarantees, Interim Final Rule and FY2011 NOFA are designed to make this type of credit-enhanced debt more attractive to investors. The Interim Final Rule will be in effect until the final rule is published after the end of the formal comment period, which ends April 15, 2011. The FY2011 NOFA thereto requires submissions on or before May 10, 2011. The Mintz Levin, Stern and Kreig team, along with Westar Trade Resources (as application packager), is preparing the next set of client applicants to be submitted in the current FY2011 NOFA round.

"This bond financing mechanism is unprecedented and could revolutionize the project finance industry," said Mr. Riedy, a member in the Corporate practice and the Energy and Clean Technology Practice Group of Mintz Levin Cohn Ferris Glovsky and Popeo, P.C. "Although initially structured for the U.S. market for advanced biofuels projects, it will work in other government loan guarantee programs in the U.S. and worldwide for renewable energy and infrastructure projects of all types."

The program was developed on behalf of Mintz Levin clients, several of whom already have received USDA Conditional Loan Guarantees.

For more information on the program, Conditional Loan Guarantees issued, Interim Final Rule and FY2011 NOFA, read the Mintz Levin Energy and Clean Technology alert issued March 15, 2011.

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