Marathon Capital Appointment

1 Feb 2006 07:01

KP Renewables PLC01 February 2006 Press Release 1 February 2006 KP Renewables - Appointment of Marathon Capital LLC to raise up to £125 million finance for renewable energy projects KP Renewables plc ("KPR" or the "Company"), the UK aggregator, investor, anddeveloper of independent green energy projects, announces today that, togetherwith its majority shareholder, Kwikpower International plc ("KPI"), it hasentered into an agreement with Marathon Capital, LLC ("Marathon") of Illinois,USA, with the objective of raising £10 million of equity investment in KPR and£115 million of additional project finance to develop, build and acquire aportfolio of renewable energy projects in the UK. KPR was established to be the leading independent renewable energy company inthe UK. The Company has already agreed framework Power Purchase Agreements tosell up to 520MW of renewable energy on pre-agreed terms to Scottish andSouthern Electricity, British Gas and BizzEnergy. It is intended that theenergy will be based on a mix of wind, biomass, wave and "Carbon Recycling"projects which qualify for Renewable Obligation Certificates ("ROC"s).Electricity retailers have an obligation to source an increasing percentage oftheir supplies from renewable energy (15.4% by 2015). Failure to meet thesetargets will result in the suppliers paying ROC buy-out penalties. KPR'sagreements are designed to help these companies attain their targets through theaggregation of the output from many small renewables projects. The Agreement KPR has identified, and continues to identify, development stage renewableenergy project opportunities. Under the agreement with Marathon, funds will besought for the following purposes: Investment into renewables projects Marathon will seek to raise funds for investment directly into renewablesprojects as follows: l £15 million for direct equity investment (which isenvisaged to be alongside KPR) in development-stage renewables opportunitiesidentified by KPR; and l £100 million for direct equity investment (which may or maynot be alongside KPR) in renewables projects where debt has been secured on aproject finance basis. Marathon will also assist the Company in the selection of appropriate renewablesprojects, funding structures and finance providers. Investment into the Company As described in its circular to shareholders dated 25 November 2005, KPR isseeking further equity investment. The Company will also work with Marathon overthe coming months to investigate the feasibility of an equity placing by KPR toraise £10 million from Marathon's institutional investor base. These funds willbe utilised by KPR for both working and project development capital. Dr. James Watkins, CEO of KPR, said; "Marathon has a proven track record in theUSA, having participated in the financing of more than US$ 2.0 billion ofrenewables projects over the past 6 years. I am delighted with this agreement,which should enable KPR to accelerate the development and scale of our portfolioof renewable energy projects. These funds should enable us to capitalise on thelegislative-driven demand for sustainable energy sources to the benefit of boththe environment and our shareholders." In relation to the agreement, Ted Brandt, CEO of Marathon, said "Marathon isdelighted to be involved with KPR and KPI and we have respect for the managementteam and its underlying renewable energy strategy. We note potential investorreturns in the UK for renewable power projects exceed what we observe in theUnited States and we expect both EU and US investors will participate in thisfund raising." Deloitte Corporate Finance will remain as KPR's Nominated Adviser and LibertasCapital and The Share Centre will remain as joint Corporate Brokers. - ENDS - For further information please contact: KP Renewables plcDr James Watkins, CEO Tel: +44 (0) 20 8231 8820drjwatkins@kprenewables.comRobert Smyth, Finance Directorrsmyth@kprenewables.com www.kprenewables.com Marathon Capital, LLCTed Brandt , CEOtbrandt@marathon-cap.com www.marathon-cap.com Media enquiries:Abchurch Gareth Mead / Martin Sutton Tel: +44 (0) 20 7398 7700gareth.mead@abchurch-group.com www.abchurch-group.com Notes to Editors KP Renewables plc The Company was listed on the AIM market of the London Stock Exchange in July2005 under the symbol KPR and is also quoted on the Frankfurt, Munich and BerlinStock Exchanges under the symbol K1P. For more information see www.kprenewables.com Kwikpower International plc KPI is a diversified energy company providing "Low Carbon Solutions". The KPIgroup has offices in London, Melbourne, and Toronto and manufacturing facilitiesin Oldbury, Dukinfield and Portsmouth, England. It had a turnover of US$ 75million in 2005, on an annualised basis, and approximately 300 personnel. KPI'sEngineering Division (KP Wellman) has over 100 years of expertise in its CoreBusiness - the design and manufacture of boilers, furnaces, heat exchangers andgas clean-up/recycling equipment. KPI has an existing engagement with Marathon to raise funds for its USAbiodiesel business and Marathon is acting as financial adviser to KPI's proposed$50.0 million "Low Carbon" offering of convertible loan notes to be placed withInvestors in the Middle East and USA. For more information see www.kwikpower.com or www.wellman-thermal.com Marathon Capital, LLC Marathon is a leading US investment bank and financial adviser focused ondelivering financial services and products to the power production, biofuel,energy conservation and renewable energy markets. Its headquarters are locatedin Bannockburn (Chicago, Illinois), USA. For more information see www.marathon-cap.com This information is provided by RNS The company news service from the London Stock Exchange