TIDMEQT
RNS Number : 1797L
EQTEC PLC
17 July 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY IN OR INTO ANY JURISDICTION WHERE TO
DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION.
Prior to its publication, certain information in this
announcement was deemed to constitute inside information for the
purposes of Article 7 of the Market Abuse Regulation (EU) No.
596/2014.
17 July 2017
EQTEC PLC
("EQTEC", "Company" or the "Group")
Potential acquisition of EQTEC Iberia
Suspension of trading of Ordinary Shares on AIM
Extension of the Altair Convertible Loan Notes
Entry into convertible loan agreement
EQTEC PLC (AIM: EQT), the technology solution company for waste
gasification to energy projects, is pleased to announce that it has
entered into non-binding heads of terms ("Heads of Terms") with
Inava Ingenieria de Analisis SL ("Inava") and the Company's
majority shareholder EBIOSS Energy SE ("EBIOSS") (together the
"Sellers"), pursuant to which EQTEC will acquire the entire issued
share capital of EQTEC Iberia SRL ("EQTEC Iberia") (the "Proposed
Transaction").
In addition, the Company also announces that it has reached
agreement with Altair Group Investment Limited ("Altair") to extend
the repayment of the GBP2.0 million, 7.5% Convertible Secured Loan
Notes ("CSLNs") issued by the Company, from 14 July 2017 to the
earlier of three business days following the completion of the
Proposed Transaction ("Completion") or 31 October 2017.
The Company and an existing shareholder (the "Lender"), have
also entered into an agreement pursuant to which the Lender has
agreed to make an interest free unsecured loan of GBP300,000 to
EQTEC (the "Convertible Loan"). Such loan will convert into new
Ordinary Shares on the earlier of the date of Completion and 31
October 2017. The Company will also grant warrants over Ordinary
Shares to the lender at the time of conversion of the Convertible
Loan.
Overview
-- EQTEC Iberia, which is the owner of EGT, a proprietary
gasification technology, is a leading player in the gasification
sector and the Proposed Transaction will provide the Company with a
strong pipeline of waste gasification to energy projects in the
UK
-- The Proposed Transaction, will constitute a related party
transaction and a reverse takeover ("RTO") under the AIM Rules for
Companies (the "AIM Rules")
-- In accordance with Rule 14 of the AIM Rules, trading in the
Company's ordinary shares of EUR0.001 each ("Ordinary Shares") on
AIM will be suspended from 7.30 a.m. today, 17 July 2017
-- The Proposed Transaction, is conditional on, inter alia,
completion of due diligence, entry into definitive documentation,
the approval of the Company's shareholders and EQTEC raising
sufficient funds to provide working capital for the enlarged group
as well as to fund the enlarged group's pipeline of projects
-- The EQTEC board on Completion is expected to include
representatives from EQTEC, EBIOSS and EQTEC Iberia, together with
additional independent Non-Executive Directors
-- Pursuant to the Heads of Terms, the Sellers have provided the
Company with a period of exclusivity until 4 October 2017
-- Agreement has been reached with Altair to extend repayment of the CSLNs
-- Agreement has been reached with the Lender for the provision of the Convertible Loan
o The Convertible Loan is unsecured and non-interest bearing and
will automatically convert into new Ordinary Shares ("Conversion
shares") on the earlier of the date of Completion and 31 October
2017
o Warrants over new Ordinary Shares to be granted to the Lender
on conversion of the Convertible Loan
Further details on the Proposed Transaction
The Company and the Sellers have entered into the Heads of
Terms, pursuant to which the Company will, subject to, inter alia,
the completion of due diligence, the entry into definitive
documentation and shareholder approval, acquire the entire issued
share capital of EQTEC Iberia, through the issue of new Ordinary
Shares to the Sellers ("Consideration Shares"). The number of
Considerations Shares to be issued is still to be agreed but is
expected to be a minimum of, in aggregate, 556 million new Ordinary
Shares.
The Proposed Transaction, if completed, will therefore
constitute a RTO under the AIM Rules and in accordance with Rule 14
of the AIM Rules, will require the publication of an AIM admission
document setting out, inter alia, details of the Proposed
Transaction ("Admission Document") and approval of shareholders of
the Company in a general meeting to be convened by the Company. In
addition, as EBIOSS is a substantial shareholder in the Company,
the Proposed Transaction will also represent a related party
transaction pursuant to Rule 13 of the AIM Rules.
In accordance with Rule 14 of the AIM Rules, trading in the
Ordinary Shares on AIM will be suspended from 7.30 a.m. today (17
July 2017) until either the publication of the Admission Document
or confirmation is given that the Proposed Transaction is no longer
proceeding. Whilst the Company will seek to publish the Admission
Document as soon as possible, the timing of this is still
uncertain.
Pursuant to the Heads of Terms, the Sellers have provided the
Company with a period of exclusivity until 4 October 2017 to
complete negotiations with the Sellers, due diligence on EQTEC
Iberia and documentation relating the Proposed Transaction. The
Proposed Transaction is also expected to be conditional on, inter
alia, EQTEC raising sufficient funds, which is expected to comprise
a placing of new Ordinary Shares ("Placing"), to provide working
capital for the enlarged group as well as fund the enlarged group's
pipeline of projects.
Accordingly, shareholders are advised that there can be no
certainty that the discussions between the parties will lead to any
agreement concerning the Proposed Transaction or as to the timing
or terms of any such transaction and there can be no assurance
that, even if agreement is reached, the Proposed Transaction will
be completed. Further updates will be provided to shareholders in
due course.
Rationale for the Proposed Transaction
EQTEC Iberia is a Spanish technology and engineering company
which is a subsidiary of EBIOSS, a Spanish waste elimination group
quoted on Mercado Alternativo Bursátil ("MAB"), the alternative
market of the Spanish Stock Exchanges. EBIOSS is also a 50.03%
shareholder in the Company. "EGT" the proprietary gasification
technology owned by EQTEC Iberia, is an advanced conversion
technology which converts biomass and waste into a synthetic gas
which can power a gas turbine to generate electricity.
In the year ended 31 December 2016, EQTEC Iberia had revenues of
EUR2.8 million and a loss before tax of EUR1.4 million and as at 31
December 2016 had total assets of EUR4.1 million and net assets of
EUR1.1 million.
Accordingly, the directors of EQTEC (the "Directors") believe
that combining EQTEC and EQTEC Iberia will create a leading company
with proprietary advanced gasification technology which is used in
industrial size power plants to convert waste into synthetic gas to
generate electricity. Together, the enlarged business will have a
highly experienced senior management team with knowledge of energy
markets, waste supply and fuel sources, project development
engineering and clean technologies with a pipeline of projects as
set out below.
The Directors believe that the enlarged group will have one of
the most advanced modular gasification technologies available on
the market which offers higher efficiency compared to most other
power generation technologies. As a result, the Directors believe
that this increased efficiency will enable EQTEC to offer more
attractive gate fees than its competitors, thereby providing it
with a competitive advantage.
The EQTEC board on Completion is yet to be agreed, but is
expected to include representatives from EQTEC, EBIOSS and EQTEC
Iberia, together with additional independent Non-Executive
Directors.
On 10 January 2017, the Company stated "in order to avail of the
opportunities presenting themselves, particularly in the energy
from waste market in the UK, a strategic partnership with a larger
group such as EBIOSS Energy with its own proprietary technology is
the best path forward. The Board believes that the existing
collaboration between the parties and the existing cooperation in
relation to project pipeline in the UK, means that it makes
strategic sense to have EBIOSS Energy as the majority shareholder
in REACT (now EQTEC), both financially and operationally". The
Directors maintain that this is still the position and the
announcement today is the logical next step in the process
commenced earlier in the year.
The Directors are also very encouraged to receive the support of
Altair for the Proposed Transaction through their agreement to the
extension of the repayment date of the CSLNs as detailed below.
Pipeline of Projects
The enlarged group is expected to have a substantial combined
pipeline of projects in the UK and Croatia. EQTEC Iberia has
recently announced progress with several gasification projects in
the UK and it is the intention that as part of the Proposed
Transaction, the contracts of these projects will be transferred
to, and implemented by, EQTEC.
These projects include:
-- Reliable Melton Hull and Reliable Seal Sands projects in
which EQTEC Iberia will supply its patented gasification
technology, EGT, as well as supervise the assembly and
commissioning of the plant; and
-- Zebec Energy project located in municipality of Usk, Wales in
which EQTEC Iberia will provide a turnkey solution including,
designing and supplying gasification technology and commissioning
the plant.
EQTEC Iberia's pipeline also includes the Catfoss Newcastle and
Renewables Hull projects in the UK and the agreement with the
Croatian energy services company SENSE ESCO Ltd. for the supply of
three gasification plants for the conversion of waste to be
installed in Croatia as announced by EBIOSS, as a substantial
shareholder of EQTEC Iberia, on MAB the Spanish Alternative Equity
Market.
Extension of the Altair Loan Notes
The Company has also reached agreement with Altair to extend the
repayment date of the CSLNs, which were due for repayment with
accrued interest on 14 July 2017. The Company and Altair have
entered into a standstill agreement whereby Altair has consented,
inter alia, to extend the repayment date of the CSLNs from 14 July
2017 to the earlier of three business days following Completion and
31 October 2017 and has accordingly consented to the amendment of
the loan note instrument .
During the period prior to the revised repayment date, the
Company and Altair will seek to agree further changes to the terms
of the CSLNs. In the event that Completion does not occur by 31
October 2017, all sums due under the CSLNs, including accrued
interest, will be payable immediately, unless Altair and the
Company have agreed new terms.
Convertible Loan
The Company and the Lender, who is an existing shareholder of
the Company, have entered into an agreement pursuant to which the
Lender has agreed to make a GBP300,000 loan to the Company on 20
July 2017. The Convertible Loan is unsecured and non-interest
bearing. The Convertible Loan will convert into Conversion Shares
on the earlier of the date of Completion and 31 October 2017 (the
"Longstop Date"). Where the Convertible Loan converts on the date
of Completion, the Conversion Shares shall be issued at a 10%
discount to the price at which any such shares are issued to
investors pursuant to the Placing (the "Placing Price"). Where the
Convertible Loan converts on the Longstop Date, the Conversion
Shares shall be issued at a 10% discount to the mid-market closing
price of an Ordinary Share on the trading day immediately prior to
the Longstop Date (the "Market Price").
On the date of conversion of the Convertible Loan the lender
will also be granted warrants to subscribe for such number of new
Ordinary Shares ("Warrants") as is equal to the number of
Conversion Shares issued. The Warrants will be exercisable for a
period of two years from the date of grant at a price of either
150% of the Placing Price or 150% of the Market Price, depending on
the applicable conversion event.
Gerry Madden, Chief Executive Officer of EQTEC, said: "We are
delighted to be taking this important step in the next stage of
development of the business. It is a logical step to take after
partnering with EBIOSS at the start of the year. A lack of domestic
incineration and gasification capacity is forcing the UK to pay
European incinerators to take our waste. Now, by using our
best-in-class technology, we have an opportunity, once the
transaction is concluded, to redirect this waste to our pipeline of
UK projects, thereby becoming a leading player in creating
electricity by converting waste into synthetic gas.
"We also greatly appreciate the support of Altair, our loan note
holder, as we now look to the future with a common goal of
realising the significant value that has been identified from
combining with EQTEC Iberia."
Enquiries
EQTEC PLC +353 (0)21 2409 056
Gerry Madden / Brendan
Halpin
Strand Hanson Limited -
Nominated Adviser +44 (0)20 7409 3494
James Harris / Richard
Tulloch / Ritchie Balmer
VSA Capital Limited - Joint
Broker +44 (0)20 3005 5000
Andrew Monk / Andrew Raca
SVS Securities Plc - Joint
Broker +44 (0)20 3700 0093
Tom Curran / Ben Tadd
Luther Pendragon - Financial
PR +44 (0)20 7 618 9100
Harry Chathli / Ana Ribeiro
/ Alexis Gore
This information is provided by RNS
The company news service from the London Stock Exchange
END
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