Eqtec Regulatory News (EQT)

8 December 2020

EQTEC plc

("EQTEC", the "Company" or the "Group")

Agreement to acquire Deeside RDF Project following further progress

EQTEC plc (AIM: EQT), a world leading gasification technology solutions company for sustainable waste-to-energy projects, is pleased to announce that, further to its announcement of 23 July 2020, EQTEC's wholly owned subsidiary, Deeside WTV Limited (the "Buyer"), has signed a Share Purchase Agreement (the "SPA") with Logik Developments Limited ("Logik") to acquire full ownership of the Deeside Refuse Derived Fuel ("RDF") project (the "Project") from Logik through the acquisition of Logik WTE Limited (the "Project SPV"). 

The Project is part of a portfolio of projects currently under review by a European owner-operator of waste to energy infrastructure, which is expecting, assuming, inter alia, completion of final credit review and finalisation of documentation, to provide the financing required for the construction phases and commercially operate the plants and this Project via investment into Deeside. Assuming the requisite financing is provided, EQTEC expects to act as the project developer on the Project, providing the design and core advance gasification technology and retain a portion of the O&M contract.

Conversations with potential EPC companies are ongoing and the documentation required for tendering the EPC contract for the first phase of the Deeside RDF Project is currently being produced. Once full commercial EPC offers are reviewed and negotiated to contract, a final decision will be reached with regards the funding structure for the Project, on which EQTEC will then provide an update to shareholders.

EQTEC and Logik are progressing discussions about a potential framework collaboration agreement that is expected to cover the keys terms of a proposed cooperation for the development of a portfolio of waste to energy projects that Logik is currently pursuing in the north of England and across the UK.

David Palumbo, CEO of EQTEC, commented:

"We are pleased to have signed this SPA to acquire the Project SPV for the Deeside RDF Project after completing our due diligence, making good progress on funding discussions and shortlisting EPC companies for the Project. We estimate that, with the application of EQTEC's advanced gasification technology, the Project would convert hundreds of thousands of tonnes per year of non-recyclable everyday household and commercial waste otherwise destined for landfill or incineration.

In this way, EQTEC expects to be able to significantly improve both the economics and the environmental impact of this plant and many traditional waste-to-energy facilities, bringing employment to the local area and economic and environmental benefits to both the local community and large industrial energy users, whilst delivering attractive returns to EQTEC's shareholders."

About the Deeside RDF Project

The Project comprises 6.27ha of land at the Deeside Industrial Estate, which currently has planning permission for a waste management facility comprising the recycling of waste, the production of RDF and an anaerobic digestion facility, in Flintshire, Wales.

EQTEC is seeking additional planning permission such that its advanced gasification technology can be applied to the Project, which would reduce the environmental impact of the Project, whilst also improving its economics. EQTEC has been in discussions with the local authority, which has been supportive and is keen to utilise EQTEC's advanced gasification infrastructure as an alternative to incineration technologies.

Subject, inter alia, to additional planning and the requisite financing, EQTEC estimates that, with the application of its advanced gasification technology, the Project would convert hundreds of thousands of tonnes per year of non-recyclable everyday household and commercial waste, otherwise destined for landfill or incineration, into 20MW of green electricity, enough to power 37,500 homes, and 27MW of thermal heat production. The electricity and heat could be exported to the grid and/or sold locally. The Company's preference would be to create private wire and heat networks using the surplus electricity and heat, as it is already aware of interest from a large industrial energy user in the area.

EQTEC estimates that the additional capacity for the thermal conversion of waste, utilising the Group's advance gasification technology, would generate additional revenues for the Project SPV of c.£16 million in gate fees, c.£6 million in electricity sales and up to £1.5 million in heat sales.

Key terms of the SPA

· Initial consideration of £2,310,000 of which a deposit amount of £300,000, from which the existing exclusivity payment of £100,000 will be deducted, is payable on signing of the SPA and the balance of £2,010,000 payable on or before a date 12 months from the date of signing of the SPA (and which sum shall be netted off the existing debts of the Project SPV).

· Additional deferred conditional consideration of £2,290,000 payable on the achievement of certain conditions precedent related to development milestones of the Project.

· The issue of a fixed dividend share in the Buyer to Logik, which gives the Logik the right to 5% of distributable profits in the Buyer. This share carries no voting rights in the Buyer.

· An additional development premium or overage payment, subject to a maximum further amount of £5.4 million, calculated in accordance with an agreed formula payable on the achievement of each of the following:

o Financial close on the funding for the Waste Reception & Anaerobic Digestion plant on the site for which planning and the necessary permits have been obtained ("Project Phase I").

o Financial close as defined on the funding for the Advanced Gasification plant on the site for which planning and the necessary permits have been obtained ("Project Phase II").

Neil Spencer, Director of Logik, commented:

"LOGIK secured planning on the proposed project site over 12 months ago and, together with EQTEC, we look forward to continuing to work closely with all local stakeholders to help ensure this project gets built and secures additional planning that will further enhance the benefits to the local community.

We are very encouraged to be working with a team with the experience and credibility of EQTEC and remain optimistic of what we expect to achieve in Deeside and in further potential collaborations with EQTEC on a portfolio of waste to energy projects that Logik is currently progressing in the north of England and across the UK."

This announcement contains inside information as defined in Article 7 of the EU Market Abuse Regulation No 596/2014 and has been announced in accordance with the Company's obligations under Article 17 of that Regulation.

ENQUIRIES

About EQTEC plc

EQTEC is a world leading advanced gasification technology partner with proven proprietary and patented technology for waste-to-value applications.

EQTEC designs and supplies advanced gasification solutions that have a higher efficiency product offering and are modular and scalable from 1MW to 25MW. EQTEC's versatile solutions are independently proven to process over 50 different types of feedstock, including municipal waste, agricultural waste, biomass and plastics with no hazardous waste or toxic emissions. EQTEC's solutions produce a uniquely pure high-quality synthesis gas (syngas), that is capable of being used for the widest applications in the creation of energy, hydrogen and biofuels.

Proprietary technology design together with deployment and maintenance capabilities mitigate the risks when using third party equipment. Our Technology Integration capabilities enable us to lead collaborative ecosystems that build sustainable waste elimination and green energy infrastructure.

The Company is quoted on AIM (ticker: EQT) and the London Stock Exchange awarded EQTEC the Green Economy Mark that recognises listed companies with 50% or more of revenues from environmental/green solutions.

Further information on the Company can be found at www.eqtec.com

About Logik Developments

"Advancing cities through collaboration"

As a specialist strategic land developer, it's our drive to responsibly shape the communities we know and love by collaborating with sector specialists. Logik was born out of a passion for the North.

The Logik team has more than 50 years' experience in responsibly developing strategic sites. Creating a legacy is at the heart of absolutely everything we do, which is why our collaborative approach with funders and city authorities has impact and ensures we're able to unlock and transform new spaces. Through our connections, we're able to bring new and unique sites to market which not only advance a city's strategic masterplan but also deliver long term value to the community, through aspirational residential developments as well as waste to energy projects.