Oil Report

INTERVIEW-Thenergo CEO says growth delayed by recession

* Slump has delayed new projects not under construction

* Sees banks requiring more funding from equity

* Seeking new lenders less affected by financial crisis

* Mulling options like private placement to raise cash

* Sees sufficient cash flow to break even by 2010

By Anne Jolis

ANTWERP, Feb 16 (Reuters) - Pricier capital has forced Belgian renewable fuel firm Thenergo NV THEB.BR to cool ambitious expansion plans and find creative ways to borrow and raise money, Chief Executive Carl Malbrain told Reuters on Monday.

Having already frozen new projects not under construction, Thenergo is hunting for banks less affected than its past lenders by the credit crisis, and is mulling options such as a limited private placement to raise future funds, Malbrain said.

The firm, which generates heat and electricity from natural gas and biological material, illustrates the challenge facing small, indebted companies struggling to grow in a recession.

“We will need new risk capital, and we’re investigating possible, alternative ways of getting it. If we want to do new projects, we will have to,” said Malbrain in an interview.

Even so, Thenergo will not be able to continue the acquisition-driven, fivefold annual revenue and production growth it achieved between 2006 and 2008, Malbrain said.

“We’ve had to scale down our ambitions, and to abort, or freeze, some of the bigger and larger, very capital intensive projects,” Malbrain said.

Thenergo’s existing projects in Belgium, the Netherlands and Germany generate enough heat and energy for 100,000 households.

Projects now being built -- for which Thenergo has already secured financing -- will bring Thenergo’s capacity to just under 100 megawatt electric by the end of 2009, far short of the 500 megawatt electric it had hoped for before the downturn.

But Thenergo has not abandoned expansion plans entirely.

“We do want to grow,” said Malbrain, noting that Britain, northern France and Eastern Europe are all attractive markets for expansion after the downturn, perhaps in 2010 or 2011.

Thenergo listed on Euronext Paris and Brussels in August without raising any capital, after it canceled a planned July listing that was meant to raise about 80 million euros. The company previously listed on the Alternext exchange.

Thenergo is now studying other ways to raise cash, such as a limited private offer, Malbrain said.

“We’re investigating either offering new shares to existing shareholders, at a discount, or, alternatively, allowing some new investors to enter at terms the existing investors can agree with,” said Malbrain.

The pressure to raise cash has increased since the credit crunch. Banks, which used to lend up to 85 percent of the money needed for a new project, now insist that a greater portion of financing come from investors, Malbrain said.

“We see that the equity portion required will increase to 30 percent from 15 percent,” predicted Malbrain.

The company is also shopping for new lenders after the banks that traditionally lent to Belgian small-caps, such as ING, Fortis, Dexia and KBC, were hit hard by the crisis.

Malbrain cited Credit Agricole's CAGR.PA Belgian subsidiary Landbouwkrediet and Netherlands-based Triodos TRIOF.AS as potential new lenders.

Though Thenergo will need to find a successful strategy for securing funds to expand, its existing operations and projects due to come online this year will generate enough cash to let it break even by early 2010, Malbrain said.

Thenergo reported a loss of 3.6 million euros for the first half of 2008, long-term borrowings of 53.36 million euros and short-term borrowings of 4.71 million euros as of June 30 2008.

Without specifying a figure, Malbrain said Thenergo will show increased debt when it reports its 2008 results on March 30. (Editing by Jeffrey Benkoe)