TIDMEQT
RNS Number : 5389A
EQTEC PLC
26 September 2022
26 September 2022
EQTEC plc
("EQTEC", the "Company" or the "Group")
Heads of Terms toward Sale of Deeside Project
EQTEC plc (AIM: EQT), a world-leading technology innovation
company enabling the Net Zero Future through advanced solutions for
hydrogen, biofuels, SNG and other energy production is pleased to
announce that, further to its announcements on 30 June 2022 and 1
September 2022, the Company, Deeside WTV Limited ("Deeside WTV")
and Logik Developments Limited (" Logik ") have signed non-binding
Heads of Terms ("HoTs") for the acquisition by a publicly quoted
corporate investor ("Investor") of the project at Deeside,
Flintshire, UK that comprises a waste reception plant, anaerobic
digestion facility and EQTEC Advanced Gasification Technology
facility (the "Project").
To facilitate this transaction, Deeside WTV and Logik have
agreed to further extend the longstop date specified in the share
purchase agreement they signed on 7 December 2020 (as amended on 6
December 2021, 1 April 2022 and 30 June 2022) (the "SPA"), to 28
February 2023 (the "Long Stop Date").
The agreement of the HoTs is in line with the Company's stated
strategy to focus its efforts on high-margin technology and
innovation services, engaging partners and customers to develop and
fund the capital projects that will deploy EQTEC's technologies.
This announcement follows a similar announcement on 21 September
2022 about the Company's Southport, UK project, whereby the Company
signed new agreements that would release it from the requirement to
purchase the project company, whilst ensuring it receives
outstanding development fees and future technology sales and
engineering services fees.
Summary of the Heads of Terms
-- The Investor will acquire 100% equity in project development
company Deeside WTV, a wholly owned subsidiary of the Company; and
be granted an option (the "Option") to acquire 100% equity in land
company Logik WTE Limited ("Logik WTE" and together with Deeside
WTV, the "SPVs") , a wholly owned subsidiary of Logik; for a total
consideration of GBP15 million.
-- The Company will charge Deeside WTV for up to GBP5.5 million
in development services fees (such fees to be largely settled from
the consideration being applied to Deeside WTV as further described
below), payable to the Company in instalments between completion of
the SPA ("Completion") and the Project reaching financial close
("Financial Close"), expected to occur in H1 2023.
-- Consideration will be paid by the Investor in two tranches:
the first of GBP6 million upon the parties entering into Definitive
Documents (as defined below); and the second tranche of GBP9
million upon Completion (assuming the Investor exercises the
Option).
-- The initial GBP6 million payment by the Investor will be applied as follows:
o GBP500,000 to the Company for 100% of its equity in Deeside
WTV;
o GBP1.5 million paid to Deeside WTV to cover all outstanding
budgeted development costs to Financial Close (less any costs which
the Investor shall settle on behalf of the SPVs, as referred to
below); and
o GBP4 million paid to Deeside WTV to fund its payment of the
Option fee to Logik under the amended and restated SPA.
-- The further GBP9 million payment by the Investor will be applied as follows:
o GBP6 million to Logik to acquire Logik WTE (and accordingly
the Project land); and
o GBP3 million paid to Deeside WTV to fund its partial payment
of EQTEC's development service fee (with the balance of GBP2.5
million payable at Financial Close). The total consideration to be
received by EQTEC for the development of the project is GBP6.0
million.
-- The non-binding elements of the HoTs, which include summary
terms set out above, will be incorporated into definitive and
binding documentation (the "Definitive Documents"). It is intended
that the Definitive Documents will be entered into as soon as
reasonably practicable, and in any event by 30 November 2022, with
Completion to occur by the Long Stop Date, although there can be no
guarantee that the transaction will proceed to completion
-- The Investor will pay for all agreed development costs until
execution of the Definitive Documents and in turn will be granted
exclusivity until 30 November 2022 to complete the transaction.
-- In the event the Investor does not exercise the Option by the
Long Stop Date, Logik will retain the land company and the
Investor, through Deeside WTV, will have the option to enter into a
lease with Logik WTE; the full GBP5.5 million development service
fee due to the Company by Deeside WTV will remain outstanding until
Financial Close and payment will be guaranteed by the Investor for
GBP4.5 million.
Project progress
The Company is in the final stages of discussion with Toyota
Motor Manufacturing (UK) Limited ("Toyota") toward agreement of
heads of terms for the supply of gas and electricity from the
Project to Toyota's neighbouring Deeside Engine Plant.
The Project has received updated heads of terms (subject to
contract) for gas and power offtake with new tariffs that
significantly improve project economics, from TotalEnergies, a
company producing and marketing a variety of energies on a global
scale.
David Palumbo, CEO of EQTEC, commented:
"The Deeside Project has gathered significant momentum and once
funded should progress steadily toward financial close. We have
top-tier partners working with us, strong support from local
stakeholders and our feedstock and offtake arrangements ready to
contract. In addition to being an exciting, multi-technology plant,
Deeside will also be one of our first RDF plants and we believe the
most efficient RDF-to-energy plants we know. We are also happy to
formally focus EQTEC's role on our core capabilities of technology
development and engineering, with a degree of broader project
development as required to support the Project. Not only does this
release us from capital investment commitments that come with
sustained SPV ownership, but it accelerates progress with our
business strategy, toward becoming exclusively a technology
innovator and licensor."
Further information about the Project
The Project comprises 6.27 hectares of land o ff Weighbridge
Road on Deeside Industrial Estate and adjacent to the Toyota
Deeside Engine Plant , in Flintshire, north Wales, UK, on a site
that was formerly a Gaz de France power station.
The prospective, multi-technology plant would include a material
recovery facility ("MRF") and anaerobic digestion ("AD") facility
that would deploy technologies from Anaergia, Inc. ("Anaergia"),
with an advanced thermal conversion ("ATC") facility that would
deploy EQTEC's syngas technology.
The MRF would process 182,000 tonnes per year of municipal solid
waste ("MSW"), separating recyclables and sending them off site for
processing, separating biogenic materials for processing at the AD
facility and producing refused-derived fuel ("RDF") from the
remaining materials, including plastics, for processing by the
EQTEC ATC facility. The 2.0 MW AD facility would produce 5.5
million NM(3) per year of biomethane, with 17,000 MWh of the gas
(c. 29%) exported to Toyota and the remainder exported to the
national grid. The 9.9 MW ATC facility would receive 77,000 tonnes
per year of RDF from the MRF and produce 77 - 87,000 MWh of
electricity per year, of which 27,000 MWh (c. 35%) would be
exported to Toyota, with the remainder exported to the national
grid. There is additional potential to apply the ATC facility to
production of hydrogen, for which initial feasibility work has been
undertaken.
At present, the Company is lead developer for the Project, in
partnership with Logik, which owns the land on which the Project is
being developed. As announced on 28 October 2021, Flintshire County
Council's Planning Committee resolved to grant planning permission
for the proposed plant. The planning authority's decision follows
its prior approval of the site for the original plan of a recycling
and AD facility.
The Project is one of three waste-to-energy/fuel projects the
Group is developing in the UK, including others at Billingham,
Teesside and Southport, Merseyside.
This announcement contains inside information as defined in
Article 7 of the EU Market Abuse Regulation No 596/2014, as it
forms part of United Kingdom domestic law by virtue of the European
Union (Withdrawal) Act 2018, as amended, and has been announced in
accordance with the Company's obligations under Article 17 of that
Regulation.
ENQUIRIES
EQTEC plc +44 203 883 7009
David Palumbo / Nauman Babar
---------------------------
Strand Hanson - Nomad & Financial Adviser +44 20 7409 3494
---------------------------
James Harris / Richard Johnson
---------------------------
Panmure Gordon - Joint Broker +44 207 886 2500
---------------------------
John Prior / Harriette Johnson
---------------------------
Canaccord Genuity - Joint Broker +44 207 523 8000
---------------------------
Henry Fitzgerald-O'Connor / James Asensio
/ Patrick Dolaghan
---------------------------
Alma PR - Financial Media & Investor Relations +44 203 405 0205
---------------------------
Josh Royston / Sam Modlin EQTEC@almapr.co.uk
---------------------------
+44 207 457 2381 / +44 788
Instinctif - General Media Enquiries 788 4794
---------------------------
Chris Speight / Tim Field EQTEC@instinctif.com
---------------------------
About EQTEC plc
As one of the world's most experienced gasification technology
and engineering companies, with a growing track record of
delivering operational and commercial success for transforming
waste-to-energy through best-in-class technology innovation,
engineering and project development , EQTEC brings together design
innovation, project delivery discipline and solid commercial
experience to add momentum to the global energy transition. EQTEC's
proven, proprietary and patented technology is at the centre of
clean energy projects, sourcing local waste, championing local
businesses, creating local jobs and supporting the transition to
localised, decentralised and resilient energy systems.
EQTEC designs, supplies and builds advanced gasification
facilities in the UK, EU and US, with highly efficient equipment
that is modular and scalable from 1MW to 30MW. EQTEC's versatile
solutions process over 50 varieties of feedstock, including
forestry wood waste, vegetation and other agricultural waste from
farmers, industrial waste and sludge from factories and municipal
waste, all with no hazardous or toxic emissions . EQTEC's solutions
produce a pure, high-quality synthesis gas ("syngas") that can be
used for the widest range of applications, including the generation
of electricity and heat, production of synthetic natural gas
(through methanation) or biofuels (through Fischer-Tropsch,
gas-to-liquid processing) and reforming of hydrogen.
EQTEC's technology integration capabilities enable the Group to
lead collaborative ecosystems of qualified partners and to build
sustainable waste reduction and green energy infrastructure around
the world.
The Company is quoted on AIM (ticker: EQT) and the London Stock
Exchange has awarded EQTEC the Green Economy Mark, which 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
.
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END
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