Active Energy Regulatory News (AEG)

Active Energy Group Plc / EPIC: AEG / Sector: Alternative Energy

4 March 2019

Active Energy Group Plc ('Active Energy', 'AEG'or the 'Company')

Acquisition of Lumberton Site & Fundraise

Active Energy, the London quoted renewable energy and forestry management business focussed on biomass, is pleased to announce that further to the Company's announcement of 11 January 2019, it has entered into an agreement (the "Agreement") with Alamac Holdings LLC ("Alamac" or the "Vendor"), a privately owned US entity, to acquire an industrial site in Lumberton, North Carolina (the "Acquisition"). The site will become the new base for all Active Energy's CoalSwitch™ operations in the US and house the first permanent production facility for CoalSwitch.

The site is strategically located close to AEG's joint venture partner Georgia Renewable Power LLC ("GRP") and is also in a prime lumber district in the US. It includes up to 415,000 sq ft of covered factory space and circa 151 acres of surrounding land (the "Lumberton Site") and is being purchased for a total consideration of US$3,330,000 (£2,511,312).

Completion of the Acquisition is subject to certain customary conditions which both AEG and Alamac expect to be satisfied during March 2019.

To part fund the Acquisition, the Company has completed a fund raising of US$3,413,000 (or £2,573,906) (before expenses) through the subscription of convertible loan notes ("CLNs") by new and existing institutional investors (the "Fundraise"). The CLNs, which are being issued as a Series B to the existing CLN instrument ( "Series B CLNs") that the Company issued on 15 March 2017, have a maturity date of 15 March 2022 and accrue interest at 8% per annum, payable quarterly in arrears. In addition, the Series B CLNs will be listed on The International Stock Exchange.

Michael Rowan, Active Energy Chief Executive said, "We continue to make progress on delivering our first commercial CoalSwitch™ product to market, which is now our main focus. The acquisition of the Lumberton Site is part of this strategy and I believe the Fundraise is an endorsement of our drive to prioritise near term revenue generative opportunities. I am delighted that we have received the support of our existing institutional shareholders and that Alamac wanted to take a significant part of the consideration via the CLNs, which we believe is another strong vote of confidence in our future growth strategy and our innovative CoalSwitch™ product.

"Lumberton gives AEG an ideal base in the heart of the lumber production region in North America and the facility is adjacent to the facility owned by our JV partner Georgia Renewable Power LLC. In addition, the site provides the foundation of our onward expansion in the region as the site benefits from proximal access to the Eastern Seaboard of the United States, ensuring AEG is connected to established export routes for sales to Europe and South East Asia. Our focus is now on installing the initial five tonne per hour CoalSwitch™ plant at the Lumberton Site, utilising existing equipment and facilities from our existing site in Utah, together with support from our partners, Andritz Group, the international engineering group. We believe AEG's relationships with both Andritz and GRP, together with the Acquisition, can transform the Company's business. We now look forward to providing updates as development accelerates at the Lumberton Site and we look to establish first production and sales of CoalSwitch™ in the coming months."

Lloyd W. Coppedge, CEO of Alamac Holdings LLC, said, "We recognise the importance of Active Energy's objective to deliver innovative second generation biomass products, that have the potential to transform the traditional power industry. This has significant implications in terms of both the environmental impact of power generation and the economic enrichment of the Lumberton area and I am delighted to be a part of these developments."

Key Terms of the Agreement and the CLNs

The total consideration for the Acquisition of the Lumberton Site is US$3,330,000. This includes a cash payment of US$1,080,000, which AEG has now made to Alamac, with the balance being settled via the issuance to Alamacof US$2,250,000 of Series B CLNs.

The Series B CLNs are redeemable after March 2020 at the election of the Company and are secured via a fixed and floating charge on AEG's assets.

Subject to the Company having the requisite authorities to issue ordinary shares of 1p ("Ordinary Shares"), Alamac will have the right to convert the Series B CLNs into Ordinary Shares at any time prior to the maturity date of 14 March 2022, at a price of 1p per Ordinary Share. 

Completion of the Acquisition is contingent upon customary closing conditions including AEG's satisfactory review and acceptance of all inspections of the Lumberton Site and title thereto, as well as appropriate re-zoning for its recognised industrial uses. Approvals are expected on or around 18 March 2019 from Robeson County, North Carolina. 

Additional Information on the Lumberton Site

The Lumberton Site is fully permitted for operations and the permits can be transferred to AEG upon completion of the Acquisition, thus reducing the time to market of the planned production of CoalSwitch™.

Following the completion of the Acquisition, the Company will focus on establishing its first industrial-scale CoalSwitch™ plant at the Lumberton Site. This is a strategic location close to the Eastern Seaboard of the United States in the heart of the lumber production region in North America. The Directors believe the location of the Lumberton Site will be advantageous for the Company as it seeks to generate regular sales of its products to Western Europe and South East Asia.

The Lumberton Site also includes key ancillary facilities, such as water treatment, an analysis lab, offices and IT hardware, thus further reducing the amount of capital expenditure required for the Lumberton Site.

The Directors believe that the size of the Lumberton Site provides significant scope for the expansion of the initial CoalSwitch™ plant via the addition of extra CoalSwitch™ production facilities. Active Energy is targeting production capacity increasing to up to 400,000 tonnes per annum during 2021. Furthermore, the Directors expect that AEG will also benefit from complementary biomass, saw logging and other commercial opportunities in the Lumberton area.

As part of Active Energy's due diligence on the Lumberton Site, the Company's Directors reviewed an independent valuation report on the Lumberton Site. The report, which was dated November 2017, valued the Lumberton Site at US$4,550,000.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

**ENDS**

Enquiries& Further Information:

About Active Energy Group:

Active Energy Group plc is a London listed (AIM: AEG) renewable energy company that has developed a proprietary technology which transforms low-cost biomass material into high-value green fuels. Its patented product CoalSwitch™ is the world's only drop-in biomass fuel that can be mixed at any ratio with coal or completely replace coal in existing coal-fired power stations without requiring plant modification.

Active Energy Group's immediate strategic focus is the production and commercialisation of CoalSwitch™ and SuperFuel™, a low emission CoalSwitch™ blend that utilises waste coal fines.