React Energy Share Discussion Threads

[1973don] 13/8/2014 15:41

From reading their accounts and announcements on previous restructuring in 2012 the debt is non-recourse to the plc. The liquidator will step in to each of the companies, see what assets are there and distribute to creditors. If there are no assets then creditors will not receive anything.

Therefore once the subsidiary companies are liquidated their debt is gone off the REACT consolidated balance sheet.

[ryan83] 13/8/2014 12:53

Don,

KBHL debt of 3.5m euro, this is on REAC balance sheet.

KBHL are to be liquidated, meetings to be had with creditors of 3.5m euro.

Therefore whatever agreement is made REAC will have to pay. Lets say they accept 50%, REAC will need to pay 1.75m euro cash. REAC had at 31 Dec 13 139k euro and then issued £1.5m SLN's (1.8m euro).

So will they need more money for admin fees and operational 'stuff'? Placing? I dont know

[1973don] 13/8/2014 10:14

Interesting development with announcement today "Winding up of dormant group subsidiaries". From my reading 3.5 million debt will be gone from the consolidated balance sheet once these dormant companies are liquidated.
Trout - Have you any views on this?

[ein] 13/8/2014 08:09

Looks like something is finally happening?

[troutisout] 11/8/2014 21:50

Now could really do with someone else posting something, as I look a little sad talking to myself....LOL!

[troutisout] 11/8/2014 21:46

"In planning for approval

In Derbyshire, the Group, together with its partner Larkfleet Energy, is seeking approval to construct and operate a 10MW biomass conversion power plant, which will cost approximately GBP40 million.

The Group, in conjunction with the London and Devonshire Trust, is also seeking approval to construct and operate a 10MW biomass conversion power plant in Plymouth, which will also cost in the region of GBP40 million.

The funding structure for both of these projects is intended to be similar to that currently being finalized for the Enfield Biomass Plant."

[troutisout] 11/8/2014 21:29

Note the registered address...could we see Enfield and Plymouth be part of a dual financing package?

Trout.

[troutisout] 11/8/2014 21:10

The reason for the above posts is that they show the rough timelines and that a 52 diesel generator plant has been given planning permission for Fulcrum on the site.
The option that React has gives them 3 years to get planning and other permissions.

On the company website and comment by Gerry Madden in the above links suggest they were hoping that our plant would be construction ready by the end of the year. I suggest that is a little wishful thinking due to planning, but a grid connection has already been secured.

I had been looking for signs of movement on the Plymouth project, but not recently, however found this tonight, but cannot find any more on it at the moment.



So looks like an application could be going in shortly....

[troutisout] 11/8/2014 20:48

Would love to see some of the readers post, even if it is to say 'good evening'.

My earlier post got me looking at Plymouth, here are a few things,



Fulcrum's planning took 5 months, although they have also put in to amend some conditions, earlier this year but they are now in construction phase.

[troutisout] 11/8/2014 18:59

13.5p.......that is nearly a third of what Enterprise Ireland paid to convert their preference shares.

At 13.5p that values the Company and just north of £4m, which is almost the same as the total consideration due to GGES if they get all the deferred consideration.

Reforce got all their deferred consideration after getting planning permissions on more than 8 wind turbine projects and I can't see GGES not getting theirs after getting all their projects through to realisation.

Still need the Company to help the market make a better valuation of the project pipeline, where are we at with these wind turbines? Are Moneygorm and Altilow going to be constructed shortly? Apparently due very soon.
What other GGES projects are close to construction? There was a mention of a project for Staffs County Council being ready to construct, this being one of five that is expected to be built and operational in the next 12 months.

Newry - what has been decided? They need to get on with this...

Enfield - are they going to tell us when they sign a revised term sheet?

Plymouth - how is progress going???

Clay Cross - likewise

The Company and it's PR company need to do some PR and update the market on all of the projects in the pipeline.

Trout.

[troutisout] 08/8/2014 18:03

A strange day today, the offer was as follows,

up to 12.5k at 15.56p, up to 25k at 16.8p and between 30k and 50k was at 16.3p (so less than the smaller amount), after the last 11.5k buy the offer went up to 16.6p.

Not sure whether the MMs are just mucking about with different offers, they have certainly done so in the past, offering lots of shares and then moving up after a relatively small buy.

Anyway still we have lots of very small sells and the odd larger buy every now and then.

Interested to hear other views,

Trout.

[troutisout] 08/8/2014 17:51

Valuation - ADVFN have got the amount of shares issued wrong as there are now 30.6 million in issue. This gives a valuation of £4.9m. So what do we have for that?

The Group has a total operating and development portfolio of 166 MW. The key projects and status as at 24 March 2014 are detailed in the following table:

REACT Equity
Project Name Sub-Sector Size MW's Status %
Culford School Biomass 1 Operational 30%
Kimbolton School Biomass 0.2 Operational 100%
Onshore
Pluckanes Windfarm wind 0.8 Operational 100%
Newry Biomass Biomass 4 Under construction 50% (92% economic interest)
Old Buckenham Hall School Biomass 0.4 Fully consented/ ready to construct 30%
Fully consented
Enfield Biomass Biomass 12 / ready to construct 100%
Onshore Fully consented
Altilow Wind wind 0.5 / ready to construct 100%
Staffordshire Fully consented
County Council Biomass 0.4 / ready to construct 30%
Onshore Fully consented
Moneygorm wind 0.5 / ready to construct 100%
Onshore
Knocksaxon Wind wind 0.5 Planning approved 100%
Onshore
Killuagh Wind wind 0.5 Planning approved 100%
Onshore
Knockavadra Wind wind 0.5 Planning approved 100%
Knockafreaghaun Onshore
Wind wind 0.5 Planning approved 100%
Claycross Biomass Biomass 10 In planning 90%
Plymouth Biomass Biomass 10 In planning 100%
Altilow Large Onshore
Windfarm wind 12.5 In planning 50%
Onshore
Runnaboll Wind wind 0.5 In planning 100%


Since then we have heard that Old Buckenham Hall School will be constructed and producing in September.
Also another 500KW wind turbine has been approved for planning in Ireland.

So we have 1.3MW of Operational projects due to REAC, with another 120KW from OBHS due at the end of next month.
I am not sure what may be produced from Newry, so will treat that as nothing at the moment.

We have been told that Moneygorm and Altilow turbines are ready for construction and that would be another 1MW.

Also GGES also has five other Biomass Heat projects in development, which are expected to be built and operational over the next 12 months.

Add onto that all of the other permitted wind turbines that are working through the wind tests, etc ready for construction.

These all have a value as they have planning and many have agreements for offtakes, etc in place. It would be good to see some of these funded with Enfield payments so the Company has a larger income stream coming in. This would make the Company more investable by the market, rather than having lots of projects producing just to pay down the debts raised to develop the projects.

I think this will remain quiet for the next few weeks, but if they can come up with a decision on Newry going forward and especially a new term sheet for Enfield prior to Financial close then this will soon start to pep up.

One thing that has struck me is that GGES and Enterprise Ireland both took shares at an equivalent of 38p, when the share price was half of that and even less for EI. So why are they happy to take shares at that money when the price on the market is much less. The market price is not really a great barometer of the true value, as the share are so illiquid and with so few MMs the price can be moved on the smallest of trades.
So we have 8m shares issued at 38p and a further 800k issued to Pinfold at 28p, this from just over 30m shares. The large holders here have 63% of the Company, with many more shares locked in from the GGES acquisition. There are some shares that are now out of their lock-in period (Reforce shares)but it would be almost impossible to sell these into the open market, a matched trade would be needed and I noted the comment in the RNS about Steve Dalton continuing to be a shareholder.

So all in all, I take nothing from the quoted share price apart from the fact there is very little interest in the market (mainly due to problems selling back into the market). The true value will come out as projects work up the development cycle, I expect this to be sold within three years and hopefully they will have many more projects online and in development then to get the best price.

Trout.

[troutisout] 08/8/2014 17:01

Over a month since anyone posted on this thread, it looks like no-one is very interested.

I have been looking at all the information that we have and trying to weigh up what is happening. Here are some of my thoughts...

No news and poor investor relations - they have issued an update at the end of H1 and recently the Director RNS.

Steve Dalton leaving - I would say this is par for the course, he would have had to stay with the Company to make sure the Reforce projects reached planning permission and they got their last payment of shares. He has done very well out of Reforce having only set it up a couple years before REAC bought them, however the payment was in shares and the last share payment was an amount of shares and not a €value of shares, so actually the share price had halved from the date of the acquisition so Reforce holders saw just half of the payment.

Last update - the large projects have been plagued with extra work that has delayed them,

Newry - due to the system they are using, I reckon we will see this changed, but this will be costly and probably cause a reduction in income from Newry short term and delays getting phase 2 online and producing.
Enfield - I feel they have misled us here, they kept saying financial close was due by last year end, now it looks closer to the end of 2014. they must of known about the co-investors due diligence and they did know about changing the planning permission for the change of gasifier system. This has taken longer than expected and I think it is all down to the fact that Enfield was due to have the same system that they are unhappy with in Newry. I think the delays have also meant they have looked at the whole business plan.
Business plan - they originally wanted to keep a 50% share of their projects, but I think this is unsustainable, firstly I think the financiers would prefer a larger share and also that the Company cannot keep financing their share of projects for long periods. The latest update talks of a change where the Company will retain a smaller percentage but will receive a 'cash development fee' and importantly will not have to invest any further funds. This works two ways, their expertise is in gaining planning and getting agreements signed, this adds value to the project before construction and it makes sense to take out that added value and initial investments, it also means they can use these funds to develop other projects and keep debt manageable. With no more funds needed to be invested in Enfield.
This makes the financial situation a lot clearer and more manageable, it seemed they were getting themselves locked into lots of long term debt and constantly needed to raise more cash. Hopefully now we can see some funds come back from the projects earlier, we will still have a holding in the projects which will have an asset value.

I can see the Newry and Enfield projects taking a while yet, but if they come up with the goods then these prices are a bargain.

Trout.

[ein] 07/8/2014 08:20

I don't think its done yet but the way the share is falling does not indicate good news is on the way. The lack of any update from the board is not encouraging and shows a lack of interest in shareholders.I can see it continuing to fall and being picked up on the cheap?

[topbanana1973] 07/8/2014 08:08

Is this stock done? It has been a rollercoaster but the end is nigh. Apologies for the negativity but in this case no news is bad news.

[the stigologist] 15/7/2014 12:09

£30m !

[troutisout] 05/7/2014 00:11

Just wonder when 'soon' will be regarding Enfield and 'coming weeks' for Newry decision......

[troutisout] 04/7/2014 20:42

I know it is difficult to sell in size in this share, but where are all these small sells coming from? A while back there were a few and the price dropped and two weeks later some of them were then cancelled?

[troutisout] 25/6/2014 18:08

I think the Zeropoint gasifier's attraction was it could be built up in modules, therefore the upfront funding could be reduced, this was obviously the plan for Newry and then Enfield.
The change in planning for Enfield and this recent RNS show they have realised the Zeropoint technology is not the most efficient. Now it also shows that through Foresight they are able to raise larger amounts and use the Nexterra technology. The Birmingham Biomass plant with lots of the same partners show there are financial backers out there for this type of plant.

Trout.

[1973don] 25/6/2014 16:04

It appears to me that there was a lot of clean up work required after some dreadful decisions by the ex CEO Donal Buckley and old Board members particularly in relation to the Newry and Enfield projects. I also saw an old presentation from Kedco and the Chief Technical Officer was a guy called Paul Kingston who apparently is a brother of the ex Chairman William Kingston. Talk about lack of corporate governance and keeping it between the family!!!

The above mentioned individuals no longer work or are associated with REACT as per new presentation from REACT so that tells its own story.

Going forward they need to sort out Newry either with new or existing technology, reach financial close on Enfield, progress pipeline and then we should see an upside on the share price.
Also noted that the last transactions re equity was at 0.38p a 100% upside on the current share price. Agree with Trout above on his analysis for this.

I think Biomass is the next big one in the UK following the advances made by wind and solar. It's interesting that there has been IPOs recently for companies buying wind and solar projects on the basis of 20 year UK government backed guarantees but none so far for Biomass. This should change as Biomass projects like CHP (guaranteed by ROCs or CFDs for 20 years) or heat generating (guaranteed by HOCs for 20 years)become more mainstream. This is the space which REACT is targeting.

[colp54] 25/6/2014 09:55

Hopefully the share price will pick up when the management start delivering something tangible. They may well have been working their socks off for the past year, but it all seems to have been background issues that we didn't know existed in the first place. What's needed here is some genuine good news and not more 'great news we've resolved another problem' stuff!

[troutisout] 25/6/2014 08:46

Still can't wrap my head around the fact that 7m of the 30m shares in issue have been recently issued in return for an acquisition or turned from loan note/preference shares to equity at 38p when the price has been hovering around at 20p.
Add to that the fact the deferred shares to Reforce were at a price half of that when the acquisition took place and it would seem everyone is happy with the 38p-40p being the true current value of the shares.

It's that it is so illiquid that the quoted share price is so far below that?

I look back at the previous six months and the news blackout and think we have now seen the release of the news that had dragged the share price down and as we start to see Newry, Enfield and other projects start to come on line/go into construction, the share price will start to re-rate from here.

DYOR,

Trout.

[troutisout] 24/6/2014 19:38

Hi Don, it would be good to hear from Allrise again,

AllRise - 27 Jan 2014 - 10:10:40 - 230 of 360
My understanding is that Phase 1 is not yet providing income - that it's all been about getting it working properly. I would imagine that is why there has been such a very big delay in getting the sanction of the funds drawdown for phase 2. These updates need to be much clearer. Tell us exactly where Phase 1 is in terms of providing revenue, and exactly when they expect phase 2 to be online and providing revenue.

AllRise - 18 Feb 2014 - 11:11:24 - 279 of 360
My understanding is that from funds drawdown, it would take 12 months to get the second 2MW installed and operational in Newry. But for me, that's best-case scenario. As far as I know, the first 2MW isn't yet yielding any revenue - the technology is not widely used, and has caused major problems getting it "optimised". Enfield is not due to use the same technology, but is due to use more widely used, tried-and-trusted systems/technology. By the way, I too cannot believe the lack of communication from them re Enfield - given that in late '13, the announcement was imminent.

[1973don] 24/6/2014 12:46

Looking back through previous announcements (see extracts below) re Newry it clearly demonstrates that this project was a mess from the start with painful side effects for the overall group.

a) Building on site commenced without funding.
b) Technical DD on technology seems non existent as Zeropoint have no operating plant even now in 2014. Why did REACT sign up for this technology and even worse it appears that this was the technology envisaged for the Enfield project. Talk about putting all your eggs in the one basket.
c) Kedco Fabrication (an internal REACT company) was building the project as EPC contractor. Why is an internal company taking the risk on building a project using unproven third party technology. Probably related to a and b above

The only positives for now is that the ex CEO is gone, most of the board at that time are gone and FBD are still supporting the project.



1)this one from the ex CEO in December 2009


Donal Buckley, Chief Executive of Kedco said:
"We are delighted that the Newry joint venture agreement has been successfully signed as it secures us with the platform
for the plant.
In relation to the Newry project, the installation and build-out of the gasification plant is underway and we intend to be
producing electricity from the plant in the first half of 2010.

2) Feb 2010

The board of Kedco provides the following update in relation to the development of its gasification project located in
Newry, Northern Ireland.
On 8 December, the Company announced that it had signed a joint venture agreement in relation to a 4 megawatt
gasification project in Newry. The project was estimated to have a total financing cost of £15 million with £5 million to be
met by Kedco and the balance to be met by bank debt.
The Company is in continued discussions with potential funders around the provision of bank debt for the Newry project
however to date, Kedco has been unable to secure financing on suitable terms. Due to the lack of debt finance, the board
does not currently expect to commission the Newry plant in the current financial year to 30 June 2010.
As Kedco has incurred significant costs in relation to the Newry project, it continues to seek funding from potential
investors. The board is currently engaged in discussions with a number of different parties around the potential investment
of equity and/or debt finance into the Company. The board is confident that suitable investment will be secured however, it
acknowledges that there can be no guarantee such investment will be forthcoming. In the absence of suitable investment
in the short-term, the board would pursue alternative means of maintaining adequate cash reserves including
management of its working capital position.

[troutisout] 24/6/2014 09:04

What of your new log burner? That is because of the regs needed now, loads of gas safe plumbers jumped over to solid fuel as there is so much to be made at the moment.

Back to REACT, the main thing is the technology, if that wasn't the right one, then they had to change, unfortunately this has cost time and money, but rather it happen now at the beginning of the Biomass plant rollouts than later down the line.

I also felt they were far too financed and reliant on the asset value, rather than seeing cold hard revenues coming through. Investors didn't see the first, hopefully they will see the revenues and realise that there is an investment case here.

Colp, I see them getting a development premium on their costs rather than just a return of them, however I assume the more they get upfront the adjustment will come off their % holding in the project.

I think they have realised to get their pipeline moving they need cash now and not revenues in the future so a change to the terms at Enfield and a return of say £2.5m+ will help them in this quest. They need to keep the smaller projects coming online and through construction to commercialisation. That is when the revenue streams start to build up. I also wonder whether they realise they will be taken out at one point, as a pipeline like they have and the current valuation do not equate. So they may be looking to build up their pipeline through acquisitions to then have something that will tempt one of the bigger players in the market or looking to enter the market.

DYOR,

Trout.