LONDON (Alliance News) - React Energy PLC Thursday said it will buy certain assets and business of UK biomass heat generation company GG Eco Solutions Ltd, and will also seek to raise up to GBP1.5 million by issuing secured loan notes to fund its organic growth and future acquisitions.
In a statement, the company said the deal to buy the GG Eco Solutions assets will give it a strong pipeline and relationships in the UK biomass sector. It will pay GBP2 million initially by issuing 5.3 million of its shares at 0.38 pence each, and could pay up to GBP1.7 million more in shares if the bought assets achieve certain performance criteria. The initial consideration will actually be GBP2.3 million because it is also issuing shares for a convertible loan.
React wants to consolidate the fragmented UK biomass energy infrastructure market. It has created a new UK unit, Grass Door Ltd, to but the GG Eco assets, and said it is now considering a number of other bolt-on acquisitions including biomass conversion plants from 500 kilowatts to 20 megawatts in capacity.
The assets it is buying from GG Eco include two school heating plants. The assets are currently loss-making, but had revenues of about GBP290,000 in the 12 months to end-March 2013, and React expects them the breakeven in the next 12 months.
React Energy shares were up 8.7% at 25.00 pence Thursday morning.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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