Montana Renewables receives 1st drawdown from $1.44 billion DOE loan facility

Photo: Calumet Inc.

Calumet Inc. announced Feb. 18 that Montana Renewables LLC, an unrestricted subsidiary of Calumet, has received the first drawdown of approximately $782 million from its $1.44 billion guaranteed-loan facility with the U.S. DOE Loan Programs Office.

The loan funds construction and expansion of the renewable fuels facility owned by Montana Renewables.

The expansion positions Montana Renewables as one of the largest sustainable aviation fuel (SAF) producers globally, enabling an increase in annual production capacity to approximately 300 million gallons of SAF and 330 million gallons of combined SAF and renewable diesel.

The planned expansion includes several key modular components, which will provide the ability to increase capacity and reduce costs.

The most important component is a second renewable fuels reactor, which will allow approximately half of the 300-million-gallon SAF capability to be online by 2026.

“DOE’s mission includes technology and domestic energy security—Montana Renewables delivers both,” said Montana Renewables CEO Bruce Fleming. “Over the past three years DOE’s Loan Program Office conducted a rigorous due-diligence process supported by experts in technology, markets, law, underwriting and risk, and Montana Renewables qualified on the merits. The incoming administration took time to verify this, and we appreciate the office’s thoroughness. Today we are pleased to continue leading Montana’s largest biofuels investment and look forward to our continued collaboration with the Loan Programs Office on the success of this project.”

Calumet CEO Todd Borgmann added, “Montana Renewables has been at the cutting edge of a rapidly developing biofuels market since its inception. Montana Renewables proved itself as an early mover in large-scale SAF production, and now we are proud to be the first project to receive the support of our new administration. I thank the entire DOE team for its continued commitment to supporting this practical and rapidly growing form of aviation fuel and for taking the time to ensure our nation’s investments are prudent ones. The expansion of Montana Renewables into one of the world’s largest SAF producers is an exceptional opportunity for regional agriculture, Montana business development, our employees and our shareholders.”

The loan guarantee is structured in two tranches, with the first tranche of approximately $782 million released to fund eligible expenses previously incurred by Montana Renewables.

Simultaneous with the first tranche funding, Calumet made an additional $150 million equity investment with cash on hand.

The balance of the guaranteed loan proceeds of up to approximately $658 million is expected to be disbursed through a delayed-draw construction facility, and Montana Renewables expects this second tranche to be disbursed during construction beginning in 2025 through the anticipated completion of the MaxSAF™ project in 2028. 

Disbursements under the guaranteed-loan facility are subject to the satisfaction of certain commercial, technical and legal conditions precedent.

During construction, retained earnings from Montana Renewables are expected to supplement DOE funds to maintain debt at 55 percent of capitalization during the MaxSAF™ construction sequence.

The loan has a 15-year tenor and an annual interest rate at the U.S. treasury rate plus three-eighths percent.

Servicing of principal and interest will be deferred until MaxSAF™ is commissioned.

Montana Renewables expects the expansion to catalyze additional regional development, particularly for renewable feedstocks sourced from farms and ranches.

By driving local infrastructure development in transportation, agricultural and energy related businesses similar to the Minnesota SAF Hub, Montana Renewables will create a large-scale, end-to-end SAF industry comprised of public and private partners in Montana and the Pacific Northwest. 

The expansion is expected to create 450 construction jobs and up to 40 operations jobs.