Signing of Call Option and Exclusivity Agreement to acquire the waste gasification and power plant Project Site at Billingham, UK
EQTEC plc (AIM: EQT), a world leading gasification technology solutions company for sustainable waste-to-energy projects, is pleased to announce that Haverton WTV Limited (the “Buyer” and a wholly owned subsidiary of the Company) and Scott Bros. Enterprises Limited (“Scott Bros”) have signed a Call Option and Exclusivity Agreement (“Option Agreement”) relating to the purchase of the land on which the proposed up to 25 MWe Billingham waste gasification and power plant (the “Project”) at Haverton Hill, Billingham, UK, will be constructed (the “Project Site”).
This announcement is further to the Company’s announcements of 8 May 2019, 23 October 2019, 23 June 2020, 18 September 2020 and 23 November 2020, regarding the Project.
The Project at Billingham, UK, is part of a portfolio of projects currently under review by a European owner-operator of waste to energy infrastructure, which is expecting, assuming, inter alia, completion of final credit review and requisite documentation, to provide the financing required for the construction phases and commercially operate the plants and this Project. Assuming the requisite financing is provided, EQTEC expects to act as the co-developer on the Project, providing the design and core advance gasification technology and retain a portion of the O&M contract.
Conversations with potential EPC companies are ongoing and the documentation required for tendering the EPC contract for the first phase of the Project is currently being produced. Once full commercial EPC offers are reviewed and negotiated to contract, a final decision will be reached with regards the funding structure for the Project, on which EQTEC will then provide an update to shareholders.
David Palumbo, CEO of EQTEC, commented:
“We are pleased to have signed this call option and exclusivity agreement to acquire the Project Site after completing our due diligence, making good progress on financing discussions and shortlisting EPC companies for the Project. We estimate that, with the application of EQTEC’s advanced gasification technology, the Project would convert 200,000 tonnes per year of non-recyclable everyday household and commercial waste otherwise destined for landfill or incineration.
In this way, EQTEC expects to be able to significantly improve both the economics and the environmental impact of this plant and many traditional waste-to-energy facilities, bringing employment to the local area and economic and environmental benefits to both the local community and large industrial energy users, whilst delivering attractive returns to our shareholders.”
Key terms of the Call Option and Exclusivity Agreement
· Scott Bros grants to the Buyer an exclusive call option (the “Option”) to require Scott Bros to enter into a binding conditional Land Purchase Agreement (the “LPA”) to sell the Project Site to the Buyer.
· The Option may be exercised any time up to 28 February 2021 (“Option Lapse Date”), and the Buyer and Scott Bros have agreed to use all reasonable endeavours in good faith to agree the LPA by such date and to enter into the same on or before such date. If an option notice is not served before the Option Lapse Date, or it is served but the terms of the LPA are not (in the event) agreed by the Option Lapse Date, then the Option shall lapse and will be of no further effect.
· The consideration for the grant of the Option is £260,000, which is payable £100,000 on exchange of the Option and £160,000 if completion under the Option (and the LPA is agreed and entered into) no later than 28 February 2021.
· The Option Agreement contains the key commercial terms of the LPA together with an all reasonable endeavours good faith obligation to agree an LPA on such terms, but such terms will only become legally binding on the execution of the LPA.
· The Option Agreement provides that the purchase price for the Project Site will be £8,600,000, less the consideration of £260,000 for the grant of the Option.
· The proposed terms of the LPA provide that completion thereunder will be subject to the satisfaction of certain conditions precedent relating to the development and financing of the Project, including that the Buyer has reached financial close in respect of such financing, the Buyer having agreed the form of the key construction, operational, offtake and feedstock contracts, and the Project being fully permitted by the relevant planning and environmental authorities.
· The Option Agreement provides that the Seller shall not (and will procure than no member of its group shall), other than with the Buyer, enter into, re-start or solicit, or initiaite, acquiesce or participate in, any negotiations with third parties as to any investment in the Project Site, any disposal of all or any part of the Project Site, or any development of the Project, during the period ending on the Option Lapse Date.
About the Project
EQTEC has been developing the Project with the support of local business, Scott Bros. The proposed plant at Billingham, with the additional planning under application, is expected to create directly dozens of local jobs and deliver significant economic and environmental benefits to both the local community and to local industrial energy users.
Subject, inter alia, to additional planning and the requisite financing, EQTEC estimates that, with the application of its advanced gasification technology, the Project will annually process 200,000 metric tonnes of non-recyclable everyday Municipal Solid Waste (“MSW”), sorted and subject to basic processing treatment to be converted into Refused Derived Fuel (“RDF”), otherwise destined for landfill or incineration, into 25MWe of green electricity, enough to power 50,000 homes, and 34MW of thermal heat production, all with no harmful or toxic emissions.
EQTEC has already secured grid connection; completed technical due diligence with technology insurance providers; and ongoing discussions with potential funders and co-developers are progressing well. The project has existing planning permission for advanced thermal conversion (“ATC”) and EQTEC is applying for a modification on the current planning to both improve the economics of the project and reduce the size of the footprint of the plant.
EQTEC has been in discussions with the local authority, which has been supportive and is keen to utilise EQTEC’s advanced gasification infrastructure as an alternative to incineration technologies.
EQTEC’s advanced gasification technology is proven and patented for waste to energy projects and the Company is increasingly confident that it has the potential to become a new UK and global standard for many traditional waste-to-energy facilities to collaborate with, reducing reliance on increasingly less attractive waste elimination methods such as traditional incineration and delivering new resilient and locally based green energy infrastructure across the UK and internationally.
To date, four commercial plants have been built and are using EQTEC’s technology. The oldest one, built in 2011, has operated for over 125,000 independently audited engine hours, receiving highly commendable feedback from leading gas engine company Jenbacher relating to purity of the syngas, reliability and efficiency.
This announcement contains inside information as defined in Article 7 of the EU Market Abuse Regulation No 596/2014 and has been announced in accordance with the Company’s obligations under Article 17 of that Regulation.
About EQTEC plc
EQTEC is a world leading gasification technology partner with proven proprietary and patented technology for sustainable waste-to-value applications.
EQTEC designs and supplies advanced gasification solutions that have a higher efficiency product offering and are modular and scalable from 1MW to 25MW. EQTEC’s versatile solutions are independently proven to process over 50 different types of feedstock, including municipal waste, agricultural waste, biomass and plastics with no hazardous waste or toxic emissions. EQTEC’s solutions produce a uniquely pure high-quality synthesis gas (syngas), that is capable of being used for the widest applications in the creation of energy, hydrogen and biofuels.
The Company’s proprietary technology design together with its deployment and maintenance capabilities mitigate the risks when using third party equipment. EQTEC’s Technology Integration capabilities enable the Group to lead collaborative ecosystems that build sustainable, waste elimination and green energy infrastructure.
The Company is quoted on AIM (ticker: EQT) and the London Stock Exchange awarded EQTEC the Green Economy Mark that 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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