New autoclave concrete block plant to be built in New Mexico

         Aercrete LLC will produce autoclaved aerated concrete block – widely used in Europe and Asia, new to N. America – in greenfield New Mexico plant
 
         Product will be used in Mesa de Sol, 20 sq mile mixed use development outside of Albuquerque
 
         Product is 1/5 the weight for normal concrete, thermal characteristics help buildings reduce energy consumption by 30-40%
 
         ClearCreek Partners (Denver & SF – http://www.clearcreekpartners.com/index.aspx), raising $21 million – $8 million equity, $13 million debt/equipment leases – for production facility
 
(New Mexico)  — Albuquerque’s budding Mesa del Sol development could become the launching pad for a chain of factories to supply western markets with a popular green construction material known as autoclaved aerated concrete block.
 
The material has been around for 80 years and is widely used in Europe and Asian countries, but it’s fairly new to the U.S. market. Now, Thomas Tulk and Michael Baron — partners in newly formed Aercrete LLC in Santa Fe — plan to invest $21 million to build the first factory in the U.S. interior.
 
To be located a short distance from Albuquerque Studios, the 65,000-square-foot facility will supply green concrete for Mesa del Sol residences and buildings, and then expand outward to surrounding states, Tulk said.
 
“We’ll start with Mesa del Sol and then push out by rail to the western region,” Tulk said. “Mesa del Sol provides an immediate market for us, but we see huge opportunities in places like California, Arizona and Colorado. The Albuquerque plant will leverage our entrance into the other markets, but in the next five years we plan to build four more factories in California, Oregon and Missouri.”

Tulk said autoclaved aerated concrete’s wide acceptance outside the U.S., plus growing domestic demand for green construction, will allow Aercrete to rapidly build a local market.
 
The special concrete is made from a simple mix of sand, cement, lime, gypsum and water formed into solid blocks with high-pressure, steam-curing autoclaves.
 
The end material weighs about one-fifth as much as normal concrete, making it easier to transport and manipulate. It’s fire resistant and has excellent thermal characteristics that help keep buildings cooler in summer and warmer in winter. Its insulating properties also make it an extremely effective noise reducer, and it’s resistant to mold and pests because it contains no organic elements, Tulk said.

“With AAC, houses and buildings often use 30 to 40 percent less energy to keep cool or heated,” he said. “It’s fully recyclable, and it can be disposed of in landfills with no risk of chemical contamination because it’s basically just sand and air.”
 
It’s also less expensive than other construction materials, such as wood, brick or steel, said Kent Beierle, principal of Albuquerque-based architectural firm Environmental Dynamics Inc.

“There is no holy grail building material, but this one comes close,” said Beierle, who has designed homes with the imported concrete. “If they build this plant, I think it will change the way construction is done in the Southwest.”
 
Some 500 factories currently make this particular concrete worldwide, but only two operate in the U.S., in Georgia and Florida.
 
Baron and Tulk hope to break ground on the Mesa del Sol factory this fall and begin operating in 2010.
 
“We’ll create the first center for AAC production in this area,” Baron said. “All the ground work is done at Mesa del Sol. We have an option on a multi-acre site and we’re ready to go.”
Mark Lautman, director of economic development at Mesa del Sol, said Aercrete’s plans are quite advanced.
 
“The completion of economic development deals are hard to gauge, but we think this is a fait accompli,” Lautman said. “We see the production facility happening. It’s mostly a question of what time frame.”
 
It’s also a question of funding. Aercrete is raising capital to build its plant, including $8 million in private equity and the rest through debt financing and equipment leasing, said Anant Vashi of ClearCreek Partners, a boutique investment firm helping Aercrete raise funds. The company made its first major presentation to local investors on July 24.
 
“We’re looking for a core group of New Mexico institutional investors to show that the state is really behind this, then we’ll approach some out-of-state investors,” Vashi said. “We’re in various levels of discussion with a number of financiers.”
 
Still, Les Matthews — managing partner at Mesa Capital Partners — said the current slump in U.S. construction could complicate things.
 
“I’m certainly impressed with the product and the management team, but the big challenge they face is getting debt financing,” Matthews said. “Equity providers will likely condition investment on raising credit for equipment and construction. That can be a big hurdle given the credit markets today.”
 
Assuming the plant is built, Tulk and Baron project rapid growth, reaching profitability by the second year of operation. With all five of Aercrete’s plants up and running, the partners project more than $200 million in revenue by 2015. At that point, they would seek an exit through acquisition.
 
If the plant is built at Mesa del Sol, Albuquerque Economic Development will assist in obtaining a $3 million incentive package, including job training and tax breaks, from the respective government agencies.
 
The plant will be highly mechanized, with about 60 full-time workers once it reaches full capacity, Baron said.
 

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