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Great eye for detail, Alan! As a matter of fact, C909 did state he "won't be posting any more". He stuck to it for an entire week, so kudos are in order ... I guess.
Be that as it may, the alleged response from EQTEC strikes me as somewhat unusual but nevertheless matching the cadence of JVL's prose. Very difficult to tell if it's genuine or a really well crafted deep fake (which I seriously doubt someone would go to such great lengths for).
"I have a basic command of spanish that usually is sufficient to order few things at the restaurant in Italy, but the people there speak dialect, they cannot speak italian, difficult to interview them properly"
I understand. When frequenting restaurants in Italy, you place your orders in Spanish. S'all good.
Could you kindly share which dialect you managed to detect at the Italian plant?
"Unluckyly I do not speak Italian so I cannot interview the local people."
It's 2023, mate ...
1. Say "Hey Google..."
2. Say a command, like: "...Be my Italian interpreter" or "...Turn on interpreter mode"
3. When you hear the tone, start speaking in either language.
"I guess I'd like to stress that we are a technology company. So like an Intel or a Microsoft..."
This is called hustling... at the highest order!
They've got the passion and the drive when pitching, and I commend EQTEC and particularly JVL for giving it their all.
Regarding EQTEC's "focus plan" and the problem they want to avoid (with larger projects) going forward, Palumbo said at the very end of the interview...
"Last year, we renegotiated all of the liabilities on some of our larger projects, and we removed ourselves from holding these liabilities and open up the possibility of bringing in larger developers and owner-operators. Erm...when we are able to do that on this type of projects, then they stop being our projects and they become someone else's where we can simply focus on doing *WHAT WE DO BEST*, whilst also recovering the capital that we advanced to develop this large project.
As Jeff mentioned before, this is the real importance of today's announcement about Limoges project with Idex. You know, everyone knows that we've been talking to Idex for over two years now. So, these relationships take long time to build but once established, or once you have a shared project to showcase, they will scale very quickly and more companies like Idex will come into the sector to deploy this type of infrastructure."
Would someone be so kind as to spell out for me this "what-we-do-best" bit?
Apart from their strong ability to hustle, which I can appreciate and think they deserve more credit for (especially during these challenging times) as well as their distinctive capability to pitch, which is also highly valuable as a business (especially Jeff strikes me as someone who does this really well), what does Palumbo mean here specifically?
Is it R&D? Delivering Front-end Design and Engineering work? Maintenance?
What is it they do best? (Please explain it to me like I'm a child...like I'm a foreign child.)
Correction:
"Meanwhile, we also...err...need the capital to continue, as we mentioned, progress on the MDCs this year, *WHILE OUR...UM...R&D PROGRAM* is critical to continue to develop the relationship with all the downstream technologies utilizing our syngas to attract strategic partners."
Having noticed a few direct quotes on here from the second interview question, I thought I'd furnish a transcription to clarify what was actually said by the participants of the call.
TOM WARNER:
So, on the lookout for some more money, David. But you have just raised, I believe, about £3.5 million there. Was that a distressed *RAISE*?
DAVID PALUMBO:
Well, I mean, with the failure of two major banks, both presenting a systemic risk to the respective sector, you could say that the whole market was in distress. Em, you know, having this happening in the middle of a capital raise added a lot of risk and complexity for us. But once again, we needed to do what, in our view, was best for the company. So, we must make decisions in real time and react to, you know, what we see in the market, even if sometimes doesn't seem ideal.
Eh, most important thing for us in the current market is to protect the balance sheet.
We still believe that the situation in the near term will continue to deteriorate, so we wanted to reprofile the debt and defer [inaudible] the payment plan originally committed, eh, with the lenders.
The debt reprofile requires an equity element to it to be able to implement, so the timing of the equity raise was in part dictated by this. Meanwhile, we also, eh, need the capital to continue, as we mentioned, progress on the MDCs this year. [inaudible] And the program is critical to continue to develop the relationship with all the downstream technologies utilizing our syngas to attract strategic partners.
These partners are interested now in broader application of our technology, particularly now in Europe with the massive push that RNG is having, like you could see it from announcements that we made recently as well, Gardanne and Limoges.
I would contend that their best (and weirdest) comment so far was an attempt to produce a clever retort when someone suggested that DP "couldn’t sell an iced drink in the middle of the desert". Showcasing his mastery of idiomatic expressions, he replied:
"The phrase you were looking for, was 'couldn't sell sand to Arabs.'"
Not sure about you, but when he broached the subject of EQTEC's versatility and their growing library of feedstocks tested, JVL had me at:
"And then all the way through our process, we are able to...uhm... FAST-TRACK some of the designs, based on how people want to use various types of waste."
...let's do it!
David Palumbo [continued]:
And, by the way, by showing these projects, you know, being online and working commercially...eh...sound, you know, we demonstrate the high...R...em...ROIs that we...eh...promised to this type of investors, and this will attract much quicker infrastructure capital.
And the other...the other challenge that we have now, you know, we have governments, and public funds as well, dithering on the net zero or not net zero. And, we mentioned this before as well, given the...given the...the tactical...eh...demand of the geopolitical situation, you have conservative behaviors, with Germany going back to coal, which is supposed to be short-term but, you know, at the same time, you know, most of the utilities are now focusing on that as well. We have France going back to oil and gas, you know. We have, you know, threats...eh...of...eh...you know...situation in Ukraine...eh...with Putin as well...eh...for the winter as well. So, we have the Biden bill setback in the U.S., and we also have the UK now threatening to reduce renewable taxes and therefore incentives.
But given the success that we’re having with specific places like in California and in France as well, there’s a lot of support and funds from this, and in Greece as well, we remain bullish that there will be, you know, the right place, the right infrastructure will attract the capital, and there we’ll be, like happened in Greece...eh...during the...the...the previous crisis, there will be a backlog of capital looking to come to the sector. So, we just need to be able to demonstrate the commercial viability of many EQTEC power plants, and then we’ll be perceived, at the time that we come out of this situation, of this market environment, we’ll be seen less as a new tech, and we’ll be seen much more as mainstream. And at that moment, it will be much easier to secure capital for the projects.
Katie Pilbeam:
Alright, well, thank you both very much indeed. From EQTEC, that’s David Palumbo, accompanied today by Jeff [anchor pause for effect] Vander Linden.
David Palumbo:
Thank you very much.
Jeff Vander Linden:
Thank you, Katie.
David Palumbo:
Always a pleasure.
Glossary of acronyms used:
COD = Commercial Operation Day
EPC = Engineering, Procurement and Construction
MDC = Market Development Center
O&M = Operations & Maintenance
Katie Pilbeam:
Alright. Just finally, maybe let’s...uh...conclude with David today, because many people, they believe that market conditions will still worsen. Are you concerned about this impact on your ability to deliver your revenue targets?
David Palumbo:
[clears throat twice] Yeah, listen, we always set ambitious targets, and we still...still see a path through the revenue guidance out of the market. We know it won’t be easy but we have planned out what do we need to do to achieve that. You know, we say as well, it’s gonna be a...uh...uh...a backloaded year, like the previous years were. Uh...and our key three milestones remain what we said before. The...the COD of the market development center, financial close, and securing the funding pipeline. We have already plans and teams mobilized for all of this on each of the projects that we [inaudible] to deliver in...eh...in the revenues.
Err, despite the market conditions, you know, which...which are what they are, we have a strong team that is very committed and is never afraid to go an extra mile when it’s required. We also say that the trying condition will remain [inaudible], we believe that that will be the case, probably for the next, you know, nine to twelve months. So, the three main things that we need to [brief pause] fight with is, as we mentioned before, you know, supply chain, we’re doing everything that we can, and...and we’re doing incredibly well managing the projects that we are in control of the delivery, like the MDCs. So...so, we are managing the lead times, we have managed this with a more effective...uh...ordering, and just by leveraging the relationship that we have with our supplier.
The...the...the cost increase on the project budget is being mitigated as well by the offtake price increase, you know, in the large projects. So, as the projects, you know, are...eh..coming online, the offtake price for electricity or the fuels is becoming significantly...eh...has been significantly...eh...impacted by inflation, and that will help as well to carry the project through. So sustaining [inaudible] around the projects [inaudible] making them more...eh...you know...eh...attractive to funders.
In terms of the funding, we said this before as well. There is far less capital available than it was year ago. So, we’re competing with other growth companies for a much small...smaller pot of capital. That simply means that we have to...uh...be...be very targeted and...and hit the right triggers. You know, there’s plenty of...uh...very risk-averse capital for infrastructure, as we said before, and all looking for energy transition assets. So, we’ll mitigate this by having the MDCs built and being operational, so we can then unlock this funding through the key markets where we have the projects.
[to be continued]
Katie Pilbeam:
Alright. Just moving away from the placing and speaking of the U.S. In Greece, we’ve not heard for some time about two of your earliest markets with some of your longest-standing projects. How are these plants now? Are they up and running, or have you moved away from these now? Then maybe Jeff take this.
Jeff Vander Linden:
Yes, you’re certainly right...uh...that the...the North Fork project in California in the U.S.,...uh...and then also the Larissa project which we’re doing for Agrigas in Greece are two of our oldest and longest-standing projects that have been underway. Um...you know, we’ve given updates regularly in our trading updates...uh...and our annual results on progress with them. Uh...but to be very plain, you know, we’ve had a number of challenges with them. I think by contrast to what I was saying earlier about, you know, the Tier-1 partners...uh...when we started with these, you know, two, in some, you know, going on three years ago with these projects, we were working with relatively small-scale, local partners, whether they be development partners or indeed...eh...construction contractors that we were working with locally. Um, they’re very talented, we’ve got, in both places, very, very talented partners.
In the case of California, we’ve got a...an exceptional developer who has very strong links into the California State government...eh...and with national funding sources, including at the federal level. When we look at Greece, we’ve got a very, again, very talented development partner with very strong links into the national government there. Um, but despite that, because they’re small companies...uh...and because we were also [critically?] working with small...uh...owner operators who were looking to...to own the asset of the plant when it was built, and to run that plant, they were working with very tight budgets. Uh, and when you throw in what we’ve had post-COVID in terms of supply-chain challenges, not just in terms of...uh...delays and so on to...uh...delivery of supply...of...uh...key material on-site, but also to the increases in cost that we’ve had associated with that. You know, we’ve had trouble now...uh...with these smaller players in terms of...uh...you know…their being able to find the budget and be able to move these projects forward.
And so, you know, although we remain very committed to those two partners, you know, because of their exceptional development capabilities, we are, again, looking for, um, you know, a Tier-1 partner increasingly who can augment that capability, bring us more credibility with funders, ensure we get the funding and ensure that we don’t run into budgetary problems in the future. So again, going back...uh...I’ll just stress the point that, you know, we are looking for Tier-1 EPCs, Tier-1 O&M partners, the largest utility companies, you know...uh...the largest players who are going to come in, own and operate...eh...the plants that hold our technology.
David Palumbo [continued]:
Another important thing to say, you know. I know it’s difficult, as we’ve said before, to be a shareholder of any company. Being in equities in the current market is pretty traumatic. But the fundamentals of us as a company are there. You know, we have the proven technology, we have the projects, and we are building the partners. So, as we attract more project finance, this will convert, and the world will see more EQTEC plants operating and the technology performing in ways that other companies that are just at the pilot scale wish they could. So, I think that with this happening the orders will continue to come. But more importantly, our platform will be in place to take on more projects. So, revenue will start becoming consistent, the share price will recognize that, particularly as we move back coming out of the...eh...this period of market volatility, also coming closer to the moment when we can start licensing the technology through these partners and licensing channels.
Katie Pilbeam:
Alright, we’re gonna sit with that for a second. Because the placing, it’s clearly brought you some new capital, that’s the whole point. But it’s also had an adverse impact on the share price. How are you explaining the value of this placing to shareholders?
David Palumbo:
Sure. Well, in...in some way this placing is like any other. You know, it comes with strategic intent aligned to everything that we have promised to shareholders. It’s...it’s… Clearly, in the current market, you know...a...um...capital raise always, you know, upsets shareholders who have a concern about dilution, and...and particularly when you have such a depressed share price. But on the other hand, it’s very different than other placings, as we have, you know...the previous two placings we have enjoyed strong appreciation from the previous placing, where now we have fallen hugely...uh...in terms of the valuation of the company but that’s been in line with the market. Most of the companies raising money in the current market are doing it at a fraction of the evaluation of the previous placing. We had to make a call if we wanted to slow down the...the...the strategy implementation that we’re doing, our strategy we believe is sound. Or, or...um...eh...the demand still, you know, outstripping our capacity to deliver. So, we need to make call in terms of keeping the balance of raising the minimum amount of capital required to keep that momentum.
So, we believe that the placing was a...was a modest request. Although we understand very well that in this market any placing at any...eh...price is a big ask. The size of the placing was kept very small, compared to others. I mean, it’s less than ten percent of the market cap, even on [inaudible] valuation, and it serves to help maintain momentum, as we say. Nothing more. The...the return that we will see of this capital will be by being able to switch in the...eh...market development centers this year, use them as a showcase, also to help to catalyze, as we’ve said before, the project funding demand for infrastructure investors. There’s a lot of capital in...eh...infrastructure looking for this type of asset but it’s very risk-averse capital. This is capital looking for you to have a footprint of real plants, operation and data. And then, you know, they are willing to fund a pipeline. So, this will help us to catalyze that as well, but also will help us in closing, you know, put in the resources required to closing all the deals in the U.S., in the UK, in France, Croatia and Greece, for us to deliver the financial close of more projects in our go-to-markets in 2023.
[to be continued]
David Palumbo [continued]:
In terms of...in line of talking about showcasing of technology, eh...we also have a tactical opportunity in one of our go-to-market entities that will require, again, a modest amount of capital for a potential significant strategic value for EQTEC. So hopefully, we’ll be able to announce some progress on that, you know, in the coming weeks as well.
Uh, it’s important to say: In the current market, which is, you know, difficult, and there is less amount capital going around. So, we need to keep prioritizing what we’re doing. Our priorities remain the same. Our three key milestones are for us the...the...COD for the plants under construction, especially the market development centers. Eh...financial close for the projects where we already have financing offers. I’m going through that process with investors or with infrastructure...eh...funders. And...and also advancing the development and the partners, getting...getting the right partners mobilized in the UK projects, as Jeff was alluding, to be able to accelerate the side of the project experience. All these activities will free...eh...capital for us as well, capital that we have advanced, and we just...that’s...that’s the rationale in which we...eh...raise capital...eh...at this moment.
Katie Pilbeam:
Yeah, indeed, because this was the placing last week, of course, raising additional capital of 3.75 million pounds. And this followed your recent announcement of a debt facility where you announced a drawdown of 5 million pounds. David, why the...the sudden push for cash? Why during such a difficult environment for capital as well?
David Palumbo (DP):
Yeah, sure. Well, first of all, I mean...uh...a little bit like the [work?] … it’s not a...uh...a sudden push for cash. I mean, err...the…the...the...primary reason for us raising cash is to keep the momentum that we have built. And...and, we have to respond decisively to the market challenges that we are facing, and you need capital to do so. The...the...the original commercial model and the projections were always been based on us being paid in advance for engineering and having no cost of procurement before financial close of the project. However, I mean, due [to] the current market situation, [inaudible], inflation, supply chain disruptions, we’re carrying full engineering in advance to accelerate the procurement, and…and...and...and also to be able to make orders early and mitigate the price increase both on parts and shipments.
To be able to address supply chain challenges, we’re placing, you know...eh...we need to do full engineering before so we can do the full procurement. And also, we’re putting bigger deposits in advance to order...eh...the...the...equipment for the sites, our scope of work. And...and at the same time, we also need to order for multiple projects together to be able to get economies of scale. Um...the...the...the point to make here as well is, like, we are not a one or two project company, you know...we...we...we...that’s not what we promised our shareholders. And to able to prove the versatility and the capabilities of EQTEC, it...it means that we...we must ensure that we present and we build a footprint in a range of solutions so we can secure our first mover advantage. You know, the need to advance investment on some of our projects, you have to call for unplanned cash, and we did not want to start pulling back or slowing down on projects. So we went to our investors and the market. It was a modest ask in our...eh...to our existing investors, eh...um...with..with...most of the...eh...existing institutional investors...eh...supporting the call. Um, as we did on the previous raise, any other raise, we’ll put the capital investment right where we believe [it] has the most strategic impact. This is not about raising working capital. This is about funding projects to showcase technology...eh...our technology, quicker in more places.
[to be continued]
Jeff Vander Linden [continued]:
Um, the other thing I want to say about these partnerships is: they don’t just, you know, bring us that delivery capability and credibility...uh...they’re also, you know, putting skin in the game. This is not just important for us, it’s also important for them. Cause after all, these are big EPCs, many of whom...uh...have had long-established capabilities and track records in the oil and gas industry or in other legacy, you know, kind of energy and delivery industries, and they’re now looking at making a transition themselves. And so, they’re looking at how they can move that across, and, of course, these types of things take time, you know. We’ve been working with Petrofac for now...uh...going on a year or more...uh...we’ve obviously been working with Wood now for almost two years and had a formal arrangement with them since the end of last year. And now Black & Veatch and Anaergia and others are ramping up, and we’ll certainly be announcing others soon.
Katie Pilbeam:
Hello there, a very good morning, you’re watching Proactive London, and joining us today is the team here from EQTEC, David Palumbo and Jeff Vander Linden. A warm welcome to you both, and today, I’m gonna kick off with Jeff, this morning, because you’ve had an increasing number of announcements in recent weeks really, including a placing in last week and two announcements yesterday as well about your Southport and Billingham projects. So, why the...the sudden flurry of activity then, Jeff?
Jeff Vander Linden (JVL):
Uh well, good morning, Katie, uh, very good to see you. Um, well, first of all, if I could say that it’s, it’s not a sudden flurry of activity, there has been a sudden flurry, I think, of news flow but that really represents...uh...what has been, uh, months...uh...of hard work on project execution across a number of these projects. Um, if I could start maybe with the announcements that we’ve made, and then perhaps David can come back and comment on the placing...er...in particular.
Um, a lot of these have to do with one of the most important things that we’ve have been focused on over the past year or so, which is the...uh...appointment of...uh...Tier-1 delivery and technology partners. Uh, and so, in the case of Southport, uh, we’ve already, uh, talked about our partnership with Anaergia. We’ve talked about our partnership now with Wood there as well. Uh, and the fact that we’re moving forward with that, uh, now that we have planning permission, is very important. Uh, Billingham now, we’ve also announced Petrofac coming in. And of course, Petrofac, as we’ve said, is a very well established Tier-1, uh, EPC within the oil and gas industry, with a very, a very distinguished background there, so we’re very happy to have that.
Just going back to the importance of partners for us...um...having these partners in not only brings, you know...uh...a huge amount of experience and credibility to the delivery...uh...effort itself but it brings it also to the confidence of funders who are looking at our technology and, although they’re excited about it, still perceive, at this relatively early stage, technology risks. Uh, and these are partners who have done technology review, understand our technology, have taken a view of what the potential delivery risks might be and also have a view on how they would mitigate them. And so, in the case of...of Petrofac...uh...that is also very, very true. In fact, they’ve been very clear...uh...that they’re clear on how they would do that. We’ve, of course, also...uh...announced Black & Veatch...uh...on our...uh...Deeside project, which is the third UK project. And with all of these partners….uh...we’re building relationships for…for solid delivery but also for going to market...uh...not just in the UK but in other markets as well.
[to be continued]