Eqtec Regulatory News (EQT)

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. With the publication of this announcement, this information is now considered to be in the public domain.

5 July 2018

EQTEC plc

("EQTEC" or the "Company")

Equity Subscription and New Debt Facility

EQTEC plc (AIM: EQT), the technology solution company for waste gasification to energy projects, announces that it has entered into arrangements in respect of the provision of new loan facilities for up to US$3.2 million (approximately £2.4 million), an equity investment of £1.15 million and the capitalisation of interest payments due to existing lenders, together with the final redemption of the convertible loan entered into in February 2018.

Summary

· New secured loan facility of up to US$3.2 million to be provided by Cuart Investments Fund and associates (the "Lenders"), a consortium put together by Origen Capital LLP.

· Loan facility to be drawn down in two equal instalments, subject to satisfaction of certain conditions precedent.

· The first instalment of the loan facility (net amount of approximately US$1.48 million) will be used primarily to redeem in full the amount outstanding under the convertible loan facility entered into by the Company on 28 February 2018. As at the date of this announcement, the redemption amount is £1.155 million.

· Origen Capital LLP ("Origen") has invested £1.15 million in consideration for the issue of 191,666,667 new ordinary shares of €0.001 each in the Company ("Ordinary Shares") at a price of 0.6 pence per share (the "Issue Price").

· Altair Group Investments Limited ("Altair") and Ecofinance (GLI) Limited ("Ecofinance") have agreed to capitalise interest payments of an aggregate of £693,168 pursuant to existing debt facilities by the issue of an aggregate of 115,528,000 Ordinary Shares at the Issue Price.

· The Lenders are to be granted with warrants over Ordinary Shares on drawdown of the initial instalment of the loan facility with the value of the warrants and exercise price determined by the prevailing share price.

· Origen, Altair and Ecofinance will be granted with warrants to subscribe for an aggregate of 153,597,333 Ordinary Shares exercisable at a price of 0.75 pence.

Ian Pearson, Chairman of EQTEC plc, said: "We are delighted to have the new investment into the Company and most importantly, the completion of the redemption of the outstanding amount of the previous loan facility. We welcome our new shareholders and thank the support of our current ones through what has been a challenging period."

Luis Sanchez, CEO of EQTEC plc, said: "As stated previously, the pipeline of projects is increasing in size and quality, we are making good progress and expect to sign contracts on two projects and subsequently start design and construction of at least one waste-to-energy gasification facility in the UK as well as another project overseas. In addition, we have several other longer-term projects at various levels of advancement, all of which gives the Board confidence going forward."

Loan facility

The Company has entered into a loan agreement with the Lenders (the "Loan Agreement") for the provision of a secured loan facility of up to US$3.2 million (approximately £2.4 million) (the "Loan Facility") with the Lenders. The Loan Facility may be drawn down in two equal instalments with the first instalment of US$1.6 million being advanced upon satisfaction of certain conditions, including:

· the provider of the convertible loan announced on the 28th February 2018 confirming the ability to redeem the outstanding amount of such loan out of the proceeds of the Loan Facility;

· the Company entering into and drawing down under arrangements with Origen, Altair and Ecofinance as described below; and

· the Company having granted warrants to the Lenders over Ordinary Shares valued at US$1.28 million at an exercise price of 125% of the average of the daily Volume Weighted Average Prices ("VWAPs") for each of the five trading days preceding the drawdown of the initial instalment of the Loan Facility.

The Company is required to satisfy certain conditions subsequent within 21 days following the date of advance of the initial instalment of the Loan Facility (or such later date as may be agreed between the Company and the Lenders). These conditions relate to the implementation of changes to the composition of the Board of Directors of the Company and the formulation and approval of a growth optimisation plan. A failure by the Company to satisfy these conditions subsequent by the relevant date could create an event of default under the Loan Agreement, unless waived by the Lenders.

The Company can also elect to redeem at any time the outstanding amount of an advance at a price equal to 105% of the principal amount together with all accrued and unpaid interest, subject to giving the Lenders four business days' notice.

A further US$1.6 million of the Loan Facility may be drawn down in approximately six months' time subject to the agreement in writing of the Company and the Lenders and upon the satisfaction of certain agreed milestones.

The Company shall pay interest on any instalments of the Loan Facility at the rate of 10 % per annum. Each instalment of the Loan Facility will have a maturity date of 12 months from the date of advance (the "Advance Date"). No repayments of the Loan Facility will be made by the Company in the first three months following the Advance Date, following which repayments shall be made as follows: (i) US$67,500 shall be paid at the end of the fourth month following the Advance Date; (ii) 70% of the principal and interest shall be repaid over the following seven months; and (iii) the balance paid on the maturity date.

The Company's obligations under the Loan Agreement are subject to the existing security granted by the Company and its subsidiaries in favour of Altair and Ecofinance.

The Company will receive net approximately US$1.3 million after expenses from the first instalment.

The Company will use the proceeds of the first instalment of the Loan Facility to redeem the amount outstanding under the convertible loan facility entered into by the Company on 28 February 2018. As at the date of this announcement, the redemption amount is £1.155 million.

Equity subscription

The Company has also agreed with Origen to raise £1.15 million via an equity subscription (the "Subscription"). The subscription is structured on the basis that Origen advances an unsecured loan to the Company which automatically converts into 191,666,667 Ordinary Shares at 0.6 pence per share. The issue of such Ordinary Shares will occur on the earlier of (i) 31 July 2018, (ii) the date of completion of an acquisition and (iii) the date on which the Company's majority shareholder, EBIOSS Energy SE, completes a further equity investment in the Company (the "Conversion Date"). The Subscription has been structured in this way in order to facilitate ongoing conversations with the Company's majority shareholder EBIOSS Energy SE regarding further investment.

On the Conversion Date, Origen will be granted with warrants to subscribe for 95,833,333 Ordinary Shares at an exercise price of 0.75p per share, exercisable for two years from the date of grant.

Capitalisation of interest

The Company has also entered into arrangements with Altair and Ecofinance to capitalise interest payments due to them under existing debt facilities. The Company and Altair have agreed that £600,000 of interest payable to Altair pursuant to the convertible loan note instrument dated 14 July 2015 (as amended) for the period of 1 July 2017 to 30 June 2019 may be satisfied by the issue of 100,000,000 Ordinary Shares at 0.6 pence per share. Further, Ecofinance has agreed with the Company that interest of £93,168 payable under the secured loan agreement dated 14 July 2015 (as amended) may be satisfied by the issue of 15,528,000 Ordinary Shares at 0.6 pence per share. These arrangements have also been structured as unsecured loans on the same terms as Origen with automatic conversions on the Conversion Date.

On the Conversion Date, Altair and Ecofinance will be granted with warrants over 50,000,000 Ordinary Shares and 7,764,000 Ordinary Shares respectively with an exercise price of 0.75 pence per share exercisable for two years from the date of grant.

Orderly market agreement

Each of Origen, Altair, and Ecofinance have entered into an orderly market agreement with the Company under which they have agreed to certain restrictions on the disposal of any Ordinary Shares issued to them under the above mentioned arrangements depending on the trading volumes of the Ordinary Shares on any given trading day. Such restrictions apply for a period of four months following the Conversion Date.

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