Re Agreement

Keydata Income VCT 2

KEYDATA INCOME VCT 2 PLC

VCT to invest in Renewable Energy Projects

The Board of Keydata Income VCT 2 plc ("the Company") is pleased to announce it
has signed agreements to invest in a series of renewable energy power generation
projects based on the technology of the gasification of recycled wood. The
Company's principal partners in these projects are Biomass Engineering Limited
("Biomass") a leading company in the field of sustainable energy (see
www.biomass-uk.com) and Centralgrange Environmental Waste Limited ("CEW") a
business based in St Helens, Lancashire specialising in waste reclamation.

On 15 June 2007, the Company entered into investment commitments in respect of
�6,227,000 the principal terms of which are as follows:

1. The Company will be investing an aggregate of �4,248,000 in five newly formed renewable energy companies (RECs). It
is intended that each REC will build, own and operate either a 1 megawatt (MW) or 0.5 MW Gasification Unit in St
Helens, Merseyside, to be fuelled by clean recycled wood provided by CEW which operates a waste reclamation station
on the site. The total annual operating capacity of the 5 RECs will be 4.5 MW of electricity, four companies
producing 1MW and one company producing 0.5MW. Biomass will provide the Gasification Units and construction start
dates are currently targeted for July 2007 with completion and grid connection scheduled for October 2008 although
it is anticipated that completion and grid connection could occur earlier in June 2008. Planning permission has
been granted in respect of the Gasification Units.
2. The site where the Gasification Units are intended to be constructed is leased to CEW by St Helens Council. It is
intended that CEW will grant an underlease to the Distributor (a new company 85% owned by CEW and 5% by Credinvest
International LLP, a corporate finance firm specialising in renewable energy) with sub-underleases being granted by
the Distributor to the RECs. The Council, as head landlord, has given outline approval to the underlease. As part
of CEWs business of operating a waste reclamation station on the site, it receives a gate fee for receipt of waste
wood from various local customers; and CEW will be entering into a long term contract to supply clean recycled wood
to the Distributor for gasification at the Gasification Units. The resultant gas will be used to generate
electricity and heat, which will be sold back to the Distributor by the RECs under a 20 year Tolling agreement.
3. The Company will also be investing an aggregate of �1,979,000 in two newly formed RECs set up to supply various
support services (eg fuel feed system, condensate filter and cooling tower and the plant required to connect to
grid) to the five operating companies detailed above.
4. The company also proposes to invest a further �2,500 for a 5% equity interest in the Distributor which will give it
exposure to increasing electricity prices.
5. Subject to tax approval from HMRC and the satisfaction of other conditions set out in the relevant funding
agreement, the Company will provide funding to each of the 7 RECs to enable it to fund the construction and
operation of the Gasification Units and related facilities. The VCT will invest 30% in each REC by way of
subscription for shares and 70% in loan notes. The precise amount of the investments will depend on the final
project costs. The Company will be providing only a proportion of the total funding required by each of the
renewable energy companies and the distributor, any shortfall to be sourced from third parties.
6. Completion of the investment in each REC will only proceed once that company has acquired all the necessary rights
to enable it to design, construct, own and operate the relevant gasification unit or common facilities (as the case
may be). Biomass will provide services for the technical and commercial operation and maintenance of the
Gasification Units on behalf of each company and the Distributor will sell the electrical output and associated
renewable benefits.
7. Keydata Investment Services Limited will provide all required company secretarial, administrative and accountancy
services for each of the 7 investee companies and the Distributor under the terms of the funding agreement for
which it will receive an annual fee of �5,000 from each REC and �10,000 from the Distributor (escalating at UK
CPI).

Stephen Oxenbridge, the Chairman of Keydata Income VCT 2 plc commented:

"I am delighted to announce this series of investments and believe they meet our
strict criteria of balancing relatively low commercial risk with an ability to
deliver the income returns outlined in the Company's flotation prospectus."

19 June 2007

For further information please contact:

Craig McNeil

Company Secretary

Keydata Income VCT 2 plc

0141 572 2300

Keydata Income Vct (LSE:KIV2)
Historical Stock Chart
From May 2024 to Jun 2024