Renewable Energy Holdings Plc : - Loan Agreement and Intention to De-List

6 February 2013

Renewable Energy Holdings plc

("REH" or the "Company")

Loan Agreement with Utilico Investments Limited ("Utilico")

Intention to De-List

Utilico Loan

Renewable Energy Holdings plc (AIM: REH) is pleased to announce that it has entered into a loan agreement with Utilico, its largest shareholder, holding 28.7 per cent. of the issued share capital of the Company, providing a  loan facility of up to £1.75 million (the "Loan").  To support the Loan, REH granted to Utilico security over substantially all of its assets, subject to (in the case of certain shares held by REH in Carnegie Wave Energy Limited and Przedxiebiorstwo GAMAR GHL Sp. Zo.o) security previously granted in favour of EDF Energies Nouvelles SA ("EDF") pursuant to a loan agreement dated 7 February 2012 (the "EDF Loan"). 

The purpose of the Loan is to:

1.   Repay £750,000 outstanding under the EDF Loan (following such repayment, the security granted in favour of EDF pursuant to the EDF Loan will be released);

2.   Reimburse REH's investment of £301,780 made since 1 May 2012 in the 81MW wind farm development known as Mynydd Y Gwynt ( "MyG");

3.   Fund REH's continued investment in MyG, in particular costs arising in connection with the National Infrastructure Planning application, an application which the Board believes could last approximately 16 months.  The Company now expects to submit the application imminently.

Last year, and as announced in the 30 April 2012 Preliminary Results Announcement, the directors of the Company (the "Directors" or "Board") sought to dispose of all the assets of the Company.  The Board specifically sought to pre-sell the MyG project to a partner who would take the on-going financial risk of the project in return for a participation in the value of the permits, once granted.  Although discussions were held with various potential buyers the Board believed that such an agreement would limit the return for REH shareholders and control of the development would be passed to the buyer.  As the Directors believe that the value of the permits, if granted, is considerable, the Board sought to secure a means whereby control of the project would remain with the Company and shareholders in REH could potentially benefit from an increase in value of permitted sites.  The Directors considered the Loan in comparison to a Joint Venture proposal and resolved it to be in the shareholders' best interests for primarily this reason.

Under the terms of the Loan, the Company will pay a £50,000 arrangement fee and 10% interest per annum on the outstanding balance, such interest to be capitalised and paid on repayment of the Loan.  In addition a success fee will be payable to Utilico as follows:

1.   £4.75 million if REH receives final planning permission to develop MyG and

i. disposes of its entire interest in MyG;

ii. enters into a joint venture agreement with any party other than Utilico to construct the wind farm;

iii.            incurs financial indebtedness owing to any party other than Utilico to construct the wind farm; or

iv.            enters into any amalgamation, demerger or merger,

2.   In the event that disposal proceeds exceed £37,500,000 a further fee is levied. The further fee is capped at an additional £5,000,000 and is calculated using the following formula.

Further fee = (A - 37,500,000)/4) + 1,000,000

(Where A is the gross consideration payable to REH pursuant to a disposal of REH's interest in MyG.)

In addition, if REH receives final planning permission to develop MyG and does not dispose of the asset within 12 months of the date of the planning permission being obtained (or such later time as agreed between REH and Utilico), then Utilico has the right to recall the Loan.  In these circumstances, a fee of £4.75 million will be paid to Utilico upon the recall of the Loan.  Following a recall of the Loan and the payment of the £4.75 million fee, REH will remain liable to Utilico for a further fee, payable upon a subsequent disposal of REH's interest in MyG, such that the total fee (including the fee payable upon the recall of the loan) payable by REH to Utilico is the greater of the aforementioned  £4.75 million and an amount calculated using the formula set out in point 2 above.

The directors on the board who are deemed to be independent of Utilico (being Sir John Baker, Mike Proffitt and Roger Harper) consider, having consulted with Strand Hanson Limited, that the terms of the transaction are fair and reasonable insofar as shareholders are concerned.

Intention to De-List

The Directors also announce that, in keeping to the previously announced decision to keep the Company's overhead costs to an absolute minimum, it will, with the appropriate advice, seek to de-list the Company from AIM in the first half of 2013.  Accordingly, an EGM Notice will be sent out in the near future which will lay out in detail, the rationale for the Directors seeking the approval of shareholders to the proposed de-listing.

Mike Proffitt, CEO said:

"We are very pleased to have the working capital provided for, which enables us to proceed through to the planning decision, without restricting upside potential in the project.  Whilst there is no certainty as to the outcome of the planning process, we believe we have an excellent project, which if permitted, will release considerable value which will be returned to shareholders.

"Should de-listing be achieved, it is anticipated that the Company will continue to be operated at significantly reduced cost and no administrative payroll, and the Company will be managed by the Board of Directors using advisors on a needs basis.  Part of the Board fees are being deferred against proceeds from asset sales.

"Finally we continue to seek a buyer for our fully permitted Polish wind farm."

- Ends -

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