Active Energy : £11.57m Convertible Loan Note & Corporate Update

Active Energy Group Plc / EPIC: AEG / Sector: Alternative Energy

15 March 2017

Active Energy Group plc ('Active Energy', 'AEG' or the 'Company')

Issue of £11.57m Convertible Loan Note and Corporate Update

Active Energy, the London quoted international renewable energy, forestry management and timber processing business, is pleased to announce that it has successfully completed a fund raising of £11.57 million (or US$14.15million) (before expenses) through the issue of convertible loan notes ('CLNs') to new and existing investors. The CLNs have a maturity date of 14 March 2022 (the 'Maturity Date') and will be listed on the Channel Islands Securities Exchange. The CLN can be converted into ordinary shares of Active Energy, at any time prior to the Maturity Date, at a 30% premium to 2.535p, being the Company's 10 day Volume Weighted Average Price ('VWAP') immediately prior to the date of this announcement. The net funds raised will primarily be used to fund the construction of the Company's first commercial scale CoalSwitch production plant for Active Energy's revolutionary CoalSwitch biomass fuel.

Overview

· CoalSwitch represents the world's first 'drop in' biomass fuel that can completely replace coal in existing coal powered fire stations without the need for expensive retrofitting, and allowing coal-fired power utilities to avoid plant closure;

· Completion of this fund raising should accelerate the commercialisation of the CoalSwitch biomass product;

· Numerous utilities and major coal fired power stations across the world have requested delivery of commercial sized batches to test in their facilities;

· A commercial plant is targeted for commissioning by Active Energy during 2017; and

· CLNs issued to new London institutions in addition to certain existing shareholders.

Richard Spinks, Chief Executive Officer of Active Energy said,'The completion of this capital raise supports our strategy to accelerate the production of CoalSwitch and to collaborate with forestry owners around the world to increase the commercial viability of their timberland assets. AEG's commercialisation strategy should capitalise on the interest we have already received from utilities and major coal fired power stations and feedstock owners from across the globe, to commercially utilise our proven 'drop in' coal replacement biomass product.

'Crucially our product can differentiate itself from other coal replacement products as it is made from forestry or other industrial process waste (including not only forestry and sawmill wastes, hog fuels and demolition wood, but also otherwise completely unusable biomass waste streams such as empty fruit bunch and palm trunks). We firmly believe that the product has been significantly enhanced and improved since we began working with our partners some two years ago, and continue to believe that it has the potential to transform the coal-fired power industry, whilst at the same time making a positive impact on the global and regional air quality and environmental landscapes. We would like to thank our new and existing investors for participating in the CLN and are further encouraged that these funding partners share this positive, environmentally responsible view of our activities and are joining AEG for the next stage of CoalSwitch's commercial development.'

Convertible Loan Note Terms

The terms of the convertible loan note are as follows:

· 5-year note, with interest of 8% per annum, payable quarterly in arrears;

· To be listed on the Channel Islands Securities Exchange;

· Can be converted by the investors to ordinary shares in AEG at 30% premium to 2.535p, being the Company's 10 day VWAP immediately prior to the date of this announcement;

· Redeemable after three years at the election of the Company;

· Senior secured debt via a fixed and floating charge on the Company's assets; and

· Welbeck Capital Partners LLP has undertaken to act as security trustee.

Further Information

The new funds have been raised from new London institutions as well as existing shareholders. The funds raised will be used to develop the Company's CoalSwitch project and to repay certain short term creditors amounting to circa US$1.4 million.

The Company has a strategic plan that has identified key geographies in North America (United States and Canada), Europe and Asia where demand for CoalSwitch already exists. This demand has been driven by the unique nature of the Company's advanced biomass product. It has proven capabilities to create a consistent fuel, reliably from every form of timber feedstock. Coupled with the performance and environmental credentials of Active Energy's CoalSwitch process, the Company believes it has a pioneering product.

The CoalSwitch product is made from the utilisation of waste wood which would normally be left to decompose following forestry operations including pulp mill / saw mill by-products such as bark, sawdust and thinnings, and wood which is over-age, under-quality, blow-down, beetle-kill, forest-fire damage and industrial waste.

Research, development and testing have been undertaken over the past two years in conjunction with the University of Utah. Both burn and handling tests, including the recent ball mill grinding tests have all passed. The CoalSwitch product is hydrophobic so it is easy to transport and avoids the need for expensive weatherproof storage facilities unlike white fuel pellets which require climate controlled storage and expensive shipping and handling consideration.

The Company is planning to roll out CoalSwitch globally in jurisdictions where it has identified long-term, high volume feedstock arrangements and where CoalSwitch has significant advantages over all other processes available today. The Company is seeking to secure binding contracts with companies to secure feedstock arrangements which may include empty fruit bunch and palm trunks in Asia, low-value hardwoods and mill waste streams in Alberta and fir tree and sawmill residues elsewhere in Canada. The Company will make further announcements regarding its strategy to roll out CoalSwitch when appropriate.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

**ENDS**

Enquiries & Further Information

About Active Energy Group

Active Energy Group Plc (AIM: AEG.L) is a London Stock Exchange-listed international renewable energy business based upon forestry assets. Its model is focussed on capturing the entire forestry value chain through sourcing, utilising and commercialising assets, and setting a new standard in the sustainable management and optimisation of timber resources. This is achieved through three complementary divisions each with intrinsic value as standalone operations:

· AEG CoalSwitch, which is commercialising a revolutionary biomass coal replacement fuel;

· AEG TimberLands, a sustainable international forestry management business targeting Europe and Canada; and

· AEG WoodFibre, an established wood fibre production business in Ukraine.

The Company is led by a highly technical and commercial team with the experience to execute its defined growth strategy and build its visibility, primarily as a London-listed timber opportunity with a revolutionary biomass fuel technology.