Ian Price, Chief Executive Officer of EQTEC, commented: “We are delighted that our framework agreement with Phoenix is already progressing at speed and creating significant value to all stakeholders.
We look forward to signing the sales contract over the coming weeks and visiting the US to explore further opportunities and projects together. This transaction fits with our strategy to have diversified revenue streams and it is a major step for the Company and for all shareholders.”
Gregory Stangl, Chief Executive Officer of Phoenix, commented:
“The technology developed by EQTEC represents a repeatable, scalable solution that could have a big impact on California’s tree mortality crisis and related climate challenges. We are delighted to have a partner who shares a vision for building out a network of distributed biomass generation.”
EQTEC plc (AIM: EQT), the technology solution company for waste gasification to energy projects, is pleased to announce that, further to the framework agreement with Phoenix Biomass Energy, Inc. (“Phoenix”) announced on 22 May 2019, it has signed its first agreement regarding the joint development of a biomass gasification power project in California, USA.
The Company has signed a legally binding agreement with Phoenix and North Fork Community Development Council (“NFCDC”) (the “Agreement”), to acquire 19.99% ownership of North Fork Community Power LLC (“NFCP”), a special purpose vehicle (“SPV”) formed to build and operate a 2MW biomass project in North Fork, California (the “Project”). The consideration for the Company’s investment will be solely satisfied by the supply of certain items of the existing equipment currently held at EQTEC’s Newry site, valued at US$2.5 million and no cash consideration will be required.
EQTEC also expects to invoice NFCP €2.2 million, under a separate sales contract, for the sale of further equipment and the supply of engineering and design services to NFCP. The sales contract, which will involve a substantial down payment on signing together with further agreed milestone payments until commissioning, is expected be completed and signed by the end of June 2019.
On commissioning the Project is estimated by NFCP to have a valuation of approximately US$20 million and be capable of generating annual revenues of approximately US$4 million.
NFCP holds the lease for the Project’s site as well the relevant permits, power purchase agreement and various other commercial agreements required for the development of the Project. Initial works have already commenced on site and the EPC contractor has been engaged.
Further information on the Agreement
Pursuant to the Agreement:
· EQTEC will contribute equipment valued at US$2.5 million into NFCP as consideration for the investment;
· EQTEC will be allotted 19.99% of the total ownership of NFCP;
· EQTEC will become one of three Managing Members of NFCP, with rights and privileges equivalent to the existing Managing Members to be further detailed in an operating agreement;
· It is intended that an operating agreement be completed prior to financial close which is expected to be by 30 June 2019; and
· The Agreement is legally binding subject only to obtaining of all standard corporate authorisations required on the part of NFCP and its members.
NFCP is currently building the Project on the site of a former mill in North Fork, California, which it intends to own and operate. NFCP is the entity that controls the site, owns the Project and holds the relevant permits, power purchase agreement and various other commercial agreements. Phoenix and NFCDC are existing shareholder and Managing Members of NFCP.
NFCP is an SPV set up specifically for this Project and has not previously traded.
Separately, the Company also updates shareholders that the commercial proposal made by the Company to the owners of the Usk Project, as announced on 9 April 2019, did not reach an acceptable agreement and the Company has no further interest in this project.
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.
About EQTEC plc
EQTEC’s business model involves sourcing and providing assistance in developing waste elimination projects to which it will ultimately sell its EQTEC Gasifier Technology (“EGT”) and O&M services. EGT enables project developers to construct waste elimination plants and recover electrical and thermal energy from the waste streams.
EQTEC sources projects that have a local supply of waste in need of elimination and conversion. It builds relationships and brings together the developers, the waste owners, the building contractors and funders. It then supplies the energy recovery technology and provides engineering services to the projects. Furthermore, EQTEC will provide O&M services to the operating projects generating recurring revenues over the life of the projects.
The Company is quoted on AIM and trades as EQT. Further information on the Company can be found at www.eqtecplc.com.
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