LONDON (Alliance News) - REACT Energy PLC shares soared on Friday after securing a EUR750,000 loan facility to continue its development of biomass gasification projects in the UK, awarding the loan provider's subsidiary a contract in return.
REACT Energy shares were trading up 50% to 4.50 pence per share on Friday morning.
The EUR750,000 unsecured facility is being provided by EBIOSS Energy AD, and whilst not formally part of the deal, REACT has awarded exclusivity to one of EBIOSS' subsidiaries to supply gasification technology as part of any engineering, procurement and construction contracts for its UK projects.
The loan facility carries an interest rate of 8.0% per year and can be drawn down in three equal monthly tranches of EUR250,000 each, with the first tranche to be drawn down immediately. The funds will be "solely used" to develop its UK gasification projects.
Importantly, EBIOSS must agree to release each tranche before providing it to REACT, and can recall any outstanding balances plus interest from January 7, 2017. In turn, REACT also has the option to repay the facility at any time.
The EBIOSS subsidiary set to provide gasification technology to REACT for its UK projects in the future is EQTEC Iberia. REACT has previously announced that its own subsidiary, Newry Biomass Ltd, in which it holds just over a 50% stake, has entered into an agreement with EBIOSS to purchase its EQTEC integrated biomass gasification power plant.
REACT plans to use the power plant to repower its Newry biomass gasification project in Northern Ireland, as long as it can secure financing. That was originally announced on the last day of 2014, with Newry Biomass spending GBP8.0 million on the plant.
REACT's partner in Newry Biomass which holds the other stake just below 50% is Farmer Business Development PLC, which owns a 23% stake in REACT.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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