Last checked at 4 Feb 2009 07:00
4th February 2009
AFC Energy plc
("AFC Energy" or the "Company")
Agreement signed with Waste2Tricity Ltd for hydrogen fuel cells
AFC Energy PLC, the low-cost fuel cell company, is pleased to announce that it has entered into an agreement with Waste2Tricity Ltd ("W2T") to supply AFC fuel cells to W2T for integration into its system for the conversion of Municipal Solid Waste ("MSW") to energy.
In conjunction with leading waste management and treatment companies, W2T is setting out to combine AFC Energy's new generation alkaline fuel cells with proven technologies including plasma gasification with the aim of providing the most efficient technology for the conversion of MSW into electricity.
Within the next 6 months, W2T hopes to fund and commence the construction of a pilot plant with a 50,000 tonne capacity with the aim of commencing operation in 3 years time. The first stage will use internal combustion engines to generate electricity whilst the second stage should generate sufficient hydrogen to use up to 12MW of AFC's fuel cells, depending upon successful demonstration.
Key terms of the agreement are:
AFC Energy will receive a £1 million licence fee in return for granting W2T exclusivity for its fuel cells in the UK waste to energy market. This payment will be conditional upon W2T successfully raising the initial capital for its pilot plant;
Once AFC Energy's fuel cells are integrated in W2T's gasification system, AFC Energy will also receive follow-on royalty payments;
AFC Energy will make a short-term, interest-bearing loan to W2T of up to £150,000 which is fully repayable by December 2010;
AFC Energy has the option to acquire 25% of the equity of W2T;
AFC Energy has the right to maintain two directors on board of W2T.
Commenting on these developments, Ian Balchin, AFC Energy's Managing Director says,
"We are delighted to announce this step in our journey towards commercialisation. The local gasification of municipal solid waste into hydrogen and its conversion into electricity is another excellent application for AFC Energy's fuel cell technology. It has the prospect of being a highly efficient method of energy recovery and we look forward to a close working relationship with W2T to realise this potential."
The successful combination of the W2T methodology with AFC Energy's fuel cells should have significant environmental benefits and make a valuable contribution to the UK's electricity supply. The methodology should also attract Renewable Obligation Certificates ("ROCs") now enshrined in the Energy Act.
"Our system will have significant environmental and cost benefits over other methods of electricity generation," says Peter Jones OBE, Director of W2T. "It has the potential to play a major role in the reduction of waste going to landfill, reduction in CO2 emissions, provide local authorities with a revenue stream, as well as being a commercially viable proposition."
Related party transaction
Tim Yeo and Terry Walsh joined the board of W2T in December 2008, when AFC Energy was exploring collaborative opportunities with W2T in the UK waste to energy market. Both directors also serve on the board of AFC Energy.
In addition, shareholders in W2T include Howard White, whose family trust is a substantial shareholder in AFC Energy. The agreement is therefore deemed to be a related party transaction pursuant to Rule 13 of the AIM Rules.
The Independent Directors of AFC Energy have received legal advice and, having also consulted with their nominated adviser, Blue Oar Securities Plc, consider the terms of the agreement to be fair and reasonable insofar as its shareholders are concerned.
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For further information please visit www.afcenergy.com or contact:
| AFC Energy plc Tim Yeo, Chairman Ian Balchin, Managing Director Simon Walters, Finance Director | 01483 276726 |
| Blue Oar Securities Plc Shane Gallwey / Toby Gibbs / Matt Marchant | 020 7448 4400 |