RNS11 Oct 2016 08:19
Heads of Agreement
Potential Financing of Newry Biomass Repowering
REACT, the renewable energy developer and operator focused on the production of clean energy in the UK and Ireland, today announces that it has signed conditional Heads of Agreement with several parties to potentially fund, through a combination of equity and debt, the repowering of its 4MW biomass gasification project located in Newry, Co. Down, Northern Ireland ("Newry Biomass").
Newry Biomass is owned by Newry Biomass Limited ("NBL") and is a joint venture with Farmer Business Development plc ("Farmers"), the Company's 23.2% shareholder. NBL is a 50.01% subsidiary company of REACT.
The Heads of Agreement envisage a total investment of up to £11.2 million to be made both directly, and indirectly through REACT, into NBL, through a combination of debt and equity. If an agreement is concluded, the equity component of the investment is to be provided by a sub fund of The Ethika Fund SICAV Plc, a Professional Investor Fund ("Ethika"), and Kyotherm SAS a France-based equity investor in biomass, geothermal energy and energy savings projects. Under the terms of the Heads of Agreement, Ethika is also to procure the debt finance for the repowering.
The terms of the Heads of Agreement between the parties are legally binding, however, are subject to the completion of, inter alia, legal, financial and technical due diligence, which is yet to commence and is expected to take approximately 60 days, and therefore may change from that set out in the Heads of Agreement. There can be no guarantee that definitive agreements will be concluded on the terms currently envisaged or at all, or on the timetable envisaged.
There is the possibility that that the equity component of the investment may require, inter alia, shareholder approval, however this will not be known until the conclusion of the due diligence exercise. In the event, shareholder approval is required, the Company will prepare and send the necessary documentation to shareholders to convene a general meeting of the Company to approve the proposals.
Background to Newry Biomass
As previously announced, planning permission for a waste to energy plant converting 25,000 tonnes per annum of wood was received by NBL in May 2009. However, due to underperformance of the original technology, a decision was made to repower the project with a new technology and with a new technology provider.
On 31 December 2015 the Company announced that it had entered into an agreement with Spanish MAB-listed EBIOSS Energy AD ("EBIOSS") to purchase its EQTEC Integrated Biomass Gasification Power Plant, with a power output of 4MW, which, subject to completion of the above investment, NBL will use in the repowering of the project. Farmers, EBIOSS and its subsidiary, EQTEC Iberia SL, are therefore also parties to the Heads of Agreement.
The repowered plant will convert woo
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