React Energy : 15th July 2015Exit from Examinership

("REACT" or the "Company")

REACT Energy plc (AIM:REAC), the energy infrastructure developer and operator which focuses on the production of clean energy in the UK and Ireland, today announces the Company's successful approval of the Scheme of Arrangement by the High Court in Dublin to be followed by its exit from the examinership process. The Company also announces the issue of £1,000,000 (before expenses) of a secured loan facility ("SLF") to fund on-going working capital requirements.
Summary:

 Successful exit from examination after the Scheme of Arrangement with creditors was approved by the High Court on 14 July 2015, with the Scheme becoming effective on Friday 24 July 2015;

 Successful completion of £1,000,000 secured loan facility to fund on-going working capital requirements;

 Project funding platform for development of project pipeline to be agreed with the assistance of EcoFinance (GLI) Limited ("EcoFinance") and Altair Group

Investment Ltd ("Altair");

 As part of the Scheme of Arrangement the Company will issue 37,470,972 new Ordinary Shares to creditors of the Company and related companies through a debt for equity conversion

 The approval of the Scheme results in c. €5.7 million of debt being removed from the Group's balance sheet;

 Warrants with a total maximum share subscription value of c. £4.7 million issued as part of the transaction to EcoFinance and Altair

On 14 July 2015, the High Court ("the Court Approval Date") approved the Scheme of Arrangement (the "Scheme") as presented by the Examiner appointed to REACT and its related companies. The Scheme becomes effective in accordance with its terms on Friday
24 July at 5.00pm ("the Effective Date"). The SLF investment from EcoFinance is now unconditional.
Details of the terms of the Scheme:

 REACT will issue 37,470,972 new Ordinary Shares to creditors of the Company and its related companies to the value of €5,724,732 (giving an effective price per share of 11p) through a debt for equity exchange

 Altair Group Investment Limited ("Altair" or "the Secured Creditor") provided funding to REACT by way of a loan agreement to finance the Examinership

process, which was announced on 13 May 2015. The existing secured debt held
by Altair, comprising the 9% Secured Loan Note of £1.5 million issued in 2014 and the Examinership financing facility of €500,000, is refinanced by way of a new
7.5% £2 million Convertible Secured Loan Note ("CSLN") and is secured by the
same security package granted in favour of EcoFinance. This will be governed by an inter creditor deed under which the SLN security plus interest and costs shall rank in priority to the CSLN security plus interest and costs. Under the terms of the CSLN, the Secured Creditor has the right to convert up to £1 million into new Ordinary Shares at £0.10p. It has also been granted an exercisable right in the form of an equity kicker of up to 3,529,412 new Ordinary Shares on the same basis as EcoFinance as outlined below

 The Company has granted 3,150,000 Warrants to Origen Capital Partners LLP, an entity related to Altair, on drawdown of the SLN. These Warrants entitle the holders to subscribe for new Ordinary Shares in the capital of REACT at an exercise price of £0.10 per share. These Warrants are assignable and capable of being exercised for a period of seven years from the date on which the SLN is drawn down

 The Unsecured Convertible Loan Note Holder, FBD, will convert €1,742,027 to new Ordinary Shares at £0.11p per share, in line with the closing price on 1

December, the date on which the Company's shares were suspended from trading on AIM. FBD will be issued 11,402,360 new Ordinary Shares

 The Revenue Commissioners, will be paid amounts owing to them of €4,350 within the Effective Date

 The Preferential Creditors, which include Revenue Commissioners and current employees, will receive a cash dividend on the 12 month anniversary of the Effective Date equivalent to the sale of that number of shares which would have equated to their debt converted at £0.11p per share in line with the closing price when the Company's shares were suspended from trading. New Ordinary Shares of 1,217,254 equivalent to the total preferential debt of €185,969 will be issued to the Trustee at a share price of £0.11p per share. On the 12 month anniversary of the Effective Date, the Trustee will dispose of the shares in the market and distribute the proceeds to the Preferential Creditors having accounted for any and all taxes then falling due

 The liability due to Unsecured Creditors and Rent Creditors of €3,796,736 shall be converted to 24,851,358 shares at £0.11p per share in line with the closing price when shares were suspended

 Contingent Guarantee Creditors will have past agreed liabilities, payable from the relevant companies where the liability arose, converted to shares at £0.11p per share. As a result the Company will be released from any guarantees that it has entered into

 As part of the Scheme, the Company has ceased to pursue the legal action, which was announced on the 3 June 2015, in relation to the Enfield Biomass Limited property lease agreement and has agreed to the revocation of the existing lease on that site. New discussions in relation to the future of this site will be commenced shortly and further updates will be made as required

 Scheme protocol agreed for disputed Creditors amounting of approximately

€164k. The Company has sought claims from the disputed Creditors which have in the majority been agreed. Some remain to be resolved. An unagreed Creditor of
any company in the Group may forward to the Company Secretary, within 21 days of the Effective Date, a proof of claim setting out the amount which it believes should be included as its claim for the purposes of the Proposals and the basis for the claim including supporting documents as applicable. The Company may issue additional new ordinary shares to settle the outstanding disputed Creditors claims.
37,470,972 new Ordinary Shares will be issued to the relevant Creditors and held by the Trustee on their behalf. The Trustee will enter into a 'Lock-in' restriction on behalf of the Creditors, whereby they are unable to dispose of the new Ordinary Shares that they will receive pursuant to the Scheme for a period of one year from the date of Admission..

The Board of REACT announces that it has raised £1,000,000 (before expenses) through a SLF. EcoFinance, a group which sources finance for renewable energy projects, has provided the SLF.
The SLF is at a fixed rate of 15% per annum, the interest on which will be paid monthly in arrears. The SLF is for a five-year term and the principle together with any accrued interest will be repayable by a bullet repayment at the end of the term. The SLF is secured by mortgage debentures, cross guarantees and share pledges over REACT and its subsidiary companies.
An exercisable right in the form of an equity kicker is attached to the SLF whereby 60 days from the drawdown under the SLF, EcoFinance has the right to an amount of fully paid new ordinary shares in the Company. The monetary value of the exercisable right will be determined by the following formula:

 9 million x (Average Share Price minus 10p), where the Average Share Price is the arithmetic average of the Company's closing share price on each of the 60 days following re-commencement of trading in the Company's shares. The value of this right has a cap of £600,000 and a floor of £200,000. The maximum number of shares issuable under this mechanism is 3,529,412 Ordinary Shares in the Company

35,300,000 Warrants are to be granted to Nirvana Capital Limited ("Nirvana") (or such company as Nirvana may direct), a company related to EcoFinance on drawdown of the SLF, subject to any necessary shareholder and other regulatory requirements. These Warrants will entitle the holders to subscribe for new ordinary shares in the capital of REACT at an exercise price of £0.10 per share. These Warrants are assignable and capable of being exercised for a period of seven years from the date on which the Loan Facility is drawn down

Following the approval of the Scheme creditors will be issued with 37,470,972 new Ordinary Shares in the Company, which after issue will amount to c. 55% of the enlarged issued share capital. This is as a result of the conversion of €5.7 million of debt into equity.
The Company has prepared a pro-forma unaudited consolidated balance sheet as at 14
July 2015and is presented below for illustrative purposes only: :

Investment in property, plant and equipment and projects 7,365,255 1,897,959

Assets relating to liquidated companies - 391,304

Total non-current assets 7,365,255 2,289,263

Trade and other receivables 42,368 163,917

Cash and bank balances 1,477,644 744,442

Current assets relating to liquidated companies - 599

Total current assets 1,520,012 908,958

TOTAL ASSETS 8,885,2663,198,221

Share Capital 16,753,246 13,006,149

Share Premium 22,691,272 20,713,637

Retained Earnings - Deficit (39,412,889)(43,404,358)

Non-controlling interests representing partner's

31,629 (9,684,572)

shareholdings in projects 2,884,350 -

Total equity 2,915,979 (9,684,572)

EcoFinance 15% SLF 1,388,889 - Altair 7.5% CSLN 2,777,778 - Senior bank loan in respect of wind turbine 1,098,500 1,135,000

BES Shares 105,000 105,000

Total non-current liabilities 5,370,167 1,240,000

Current liabilities

Trade and other payables including professional fees 566,371 2,134,725

FBD 5% CLN - 1,669,880

Altair 9% SLN - 1,876,126

12% Loan Note - 91,257

15% Shareholders' loan - 155,139

Senior bank loan in respect of wind turbine 32,750 15,000

Current liabilities relating to liquidated companies - 5,700,666

EcoFinance, Nirvana and Altair have entered into separate agreements in relation to financing provided to the Company. These agreements include the following:

 Nirvana has granted to Altair an option to acquire the full economic benefit of up to 8,825,000 of the Warrants to be granted to Nirvana at a price of £0.08. This option may be exercised by Altair for a period of 120 days from the Effective Date; and

 EcoFinance has granted to Altair an option to acquire the benefit and security of the £1,000,000 SLF. This is a one-year option and the price of the option increases from £1,006,250 to £1,100,000 depending on the time of exercise.

EcoFinance, Nirvana and Altair (including their respective related parties) have entered into agreements resulting in them being deemed as parties acting together or in concert. The combination of equity kickers, warrants and conversion rights that could be exercised by these parties could mean that their combined future shareholdings could exceed 30%. The Company has obtained a waiver of Rule 9.1 (a) from the Irish Take Over Panel in respect of the obligation to make a mandatory offer for the entire issued and to be issued share capital of the Company not already held by EcoFinance, Nirvana and Altair (including their respective related parties), conditional upon the approval by a majority of the independent shareholders of REACT in a poll. The Company expects to publish a whitewash circular to be issued to shareholders seeking such approval by on or around
10 August 2015.

Pursuant to the Scheme, an application will be made for the admission of 37,470,972 new Ordinary Shares of €0.10 each in REACT to trading on AIM. The new Ordinary Shares, which will be issued, fully paid, will rank pari passu in all respects with the existing ordinary shares of REACT. Admission of the new Ordinary Shares to trading on AIM is expected to occur on or around 31 July 2014.
As a result of the Scheme, REACT's total issued and voting share capital will comprise

68,140,494 ordinary shares. Shareholders should use this figure as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company, under the FCA's Disclosure and Transparency Rules.

REACT Energy plc is committed to operating clean electricity and heat generation plants in the UK and Ireland.
The Company identifies, builds owns and operates plants and possesses significant knowledge of energy markets, clean technologies, fuel sources, project development, project finance and project delivery.
REACT currently has four operational clean energy plants generating revenue from the sale of electricity and heat.
The generation of clean electricity and heat from sustainable sources has the potential to address the key energy challenges of energy security and carbon commitment and provide strong returns on capital employed.
The company is listed on AIM and trades as REAC.www.reactenergyplc.com

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