KEDCO PLC 31 March 2016
("REACT", "Company" or the "Group")
REACT Energy plc (AIM:REAC), the energy infrastructure developer and operator which focuses on the production of clean energy in the UK and Ireland, announces its unaudited interim results for the six months ended 31 December 2015.
Successful exit from Examinership after the Scheme of Arrangement with creditors, loan notes holders and contingent guarantee creditors was approved by the High Court in July 2015
Newry Biomass Limited ("NBL"), a 50.01% subsidiary of the Company, entered into an agreement with EBIOSS Energy AD ("EBIOSS") to purchase its gasification power Plant equipment to repower the Newry biomass gasification project ("Newry Project")
Equipment purchased from EBIOSS will form part of an Engineer, Procure and Construct ("EPC") contract to be signed between NBL and EQTEC Iberia ("EQTEC"), a subsidiary of EBIOSS, in respect of the Newry Project
NBL applied and received confirmation from Ofgem that they have been granted an extension to 31 March 2018 for the ROCs registration of the Newry Project
Financial SummaryGroup revenue of €0.13 million (H1 2014: €0.15 million)
Administrative costs of €0.25 million (H1 2014: €0.61 million)
Loss for the period from continuing operations of €0.4 million (H1 2014: Loss for period €1.3 million)
Entered into a £1,000,000 secured loan facility ("SLF") with EcoFinance GLI Limited ("EcoFinance") to fund on-going working capital requirements including the continued development of its project pipeline
Refinanced Altair Group Investment Limited's ("Altair") existing secured debt, comprising a 9% secured loan note of £1.5 million and the Examinership financing facility of €500,000, with a new two year 7.5% £2.0 million convertible secured loan note ("CSLN") with Altair
As part of the Examinership, liabilities reduced by €5.7 million following a debt for equity swap resulting in the issue of, in aggregate, 37,470,972 ordinary shares
Post-period end eventsSecured a €750,000 loan facility from EBIOSS (the "EBIOSS Facility"), for continuing investment in its portfolio of biomass gasification projects in the UK. Subsequently amended so that the proceeds from the second tranche, amounting to, in aggregate, €250,000, can now be drawn down for working capital needs of the Company as well as for project development costs. To date €400,000 has been drawn down
React has granted EQTEC exclusivity to provide gasification technology as part of EPC contracts for its biomass gasification project pipeline in the UK
The Chairman and Chief Executive's Statement and the unaudited interim results for the six months ended 31 December 2015, which are contained below and form part of this announcement, include further important information and disclosures. The announcement should be read in its entirety.
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For further information:REACT Energy plc
Gerry Madden / Brendan Halpin
+353 (0)21 2409 056
Strand Hanson Limited - Nomad & Broker
James Harris / Richard Tulloch / Ritchie Balmer
+44 (0)20 7409 3494
About REACT:REACT Energy plc is committed to operating clean electricity and heat generation plants in the UK and Ireland. The Company seeks to identify, build, own and operate renewable projects and possesses significant knowledge of energy markets, clean technologies, fuel sources, project development, project finance and project delivery. REACT currently has an interest in 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 quoted on AIM and trades as REAC. Further information on the Company can be found at www.reactenergyplc.com.
Chairman's and Chief Executive's ReportThe Group's objectives during the period were very clear:
Obtain Court approval for a Scheme of Arrangement and complete the Examinership process;
Complete the financing facility with EcoFinance;
Restore trading in the Company's shares on AIM; and
Select a commercially viable gasification technology for the Newry Project.
Having achieved these objectives the Group's business strategy remains one of focusing the Group's resources on delivering projects to financial closure and managing the implementation and operation of those projects. The intention is to retain a long-term income stream linked to profits generated by projects in addition to receiving a development fee from third parties in exchange for project equity. The Group has projects at various stages of development, and, subject to funding, will look to bring them into operation.
EXAMINERSHIPOn 27 July 2015, the Group announced the restoration of its shares to trading on AIM following the successful exit of the Company from an examinership process (the procedure under Irish Law introduced to provide a mechanism for the rescue and return to health of ailing, but potentially viable, companies) (the "Examinership"). As part of the Examinership process the Company:
Reduced liabilities by €5.7 million through a debt for equity swap resulting in the issue of, in aggregate, 37,470,972 ordinary shares to relevant creditors;
Raised £1.0 million (before expenses) by way of the SLF with EcoFinance. The SLF, to be utilised for corporate development and general working capital purposes, is for a term of five years at a 15% per annum fixed rate of interest, payable monthly in arrears;
Refinanced Altair's existing secured debt, comprising a 9% secured loan note of £1.5 million and the Examinership financing facility of €500,000, with a new two year 7.5% £2.0 million CSLN with Altair; and
Issued, in aggregate, 38,450,000 warrants to certain parties related to EcoFinance and Altair, which are exercisable at a price of 10 pence per share.
Further details on the Examinesrhip are set out in the Company's Annual Report and Accounts for the year ended 30 June 2015 and in the circular to shareholders dated 22 September 2015.
STRATEGY AND PROSPECTSThe Group is a renewable energy project developer and operator. The Group seeks to take projects from "Greenfield" (greenfield land) stage to "Shovel Ready" stage (projects where planning and development is advanced enough that, given sufficient funding, construction can begin within a very short time frame) with turnkey construction contracts and financial packages in place. Debt and equity partners are sought to fund the construction phase in return for a share of the project equity.
The political and regulatory environment within the UK has continued to be challenging, with a lack of direction and continued changes to the long term support mechanisms available for renewable energy projects developed under the Electricity Market Review (EMR), with the recent introduction of Contracts for Difference (CfD) in place of the Renewables Obligation Certificate (ROC) regime.
The Group welcomes the recent announcement made in the recent UK budget, 16 March 2016, the key relevant points of which are:
The UK Government has confirmed that, in aggregate, £730 million, for the 15 year contracts of support, has been allocated to the next set of CfD auctions to be held this Parliament.
- The technologies covered by this support are offshore and other less established technologies (including Advanced Conversion Technologies which the Group is in the process of deploying).
£290 million, for the 15 year contracts of support, will be made available for this year's CfD round, expected to be in late 2016.
The Group's business is broken down into Biomass Combined Heat and Power (CHP) projects in the UK, Biomass Heat Projects in the UK and Wind Turbine projects in Ireland.
NBL, a 50.01% subsidiary of the Company, which owns the Newry Project, has entered into an agreement with Spanish MAB-listed EBIOSS to purchase its EQTEC Integrated Biomass Gasification Power Plant, with a power output of 4MW, which NBL will use in the repowering of the Newry biomass gasification project.
The gasification equipment purchased from EBIOSS will cost €4.963 million, fully payable in cash. It has been contractually agreed between NBL and EBIOSS that the equipment purchased will form part of an EPC contract to be signed between EQTEC Iberia, a subsidiary company of EBIOSS or a company designated by EQTEC Iberia, and NBL. The equipment has been delivered and is currently on site in Newry. The credit terms obtained under the purchase and sale agreement with EBIOSS provide for full payment by NBL not later than 30 June 2016. The Company and NBL are currently in discussions with a number of parties with regards to securing the necessary financing to repower the Newry Project and it is the intention to reach a conclusion on such discussions before the end of Q2 2016.
Once financial close on repowering the Newry Project is achieved, the Company expects that the plant will be able to again export electricity to the grid within 15 months.
NBL applied and received confirmation from Ofgem that they have granted an extension to 31 March 2018 for the ROCs registration of the Newry Project, at which point the Newry Project will need to have been repowered and commissioned.
In Derbyshire, the Group, together with its partner Larkfleet Energy, is seeking approval to construct and operate a 12MW biomass conversion power plant. The planning and permit application have been made. A decision on planning is expected by mid-2016.
The Company owns 30% of a special purpose vehicle ("SPV") set up with Equitix ESI Finance Limited ("Equitix") and receives development and on-going management fees from it. The SPV currently operates three biomass heat projects.
React Energy plc issued this content on 31 March 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 31 March 2016 10:35:04 UTC
Original Document: http://www.reactenergyplc.com/images/pdfs/Interim-Results-31-December-2015.pdf
