React Energy Share Discussion Threads

[cliveas] 10/1/2017 07:55

RNS!!!!!!!!!!!!!!


Significant Investment by EBIOSS Energy in REACT Energy Group and Notice of EGM

HIGHLIGHTS



· EBIOSS Energy has conditionally assigned the benefit of the €5,150,226 debt due to EBIOSS Energy from REACT's 50.02 per cent. subsidiary, Newry Biomass Limited ("NBL"), pursuant to the EQTEC Agreement (the "NBL Debt"), to REACT pursuant to the Settlement Deed



· REACT has conditionally issued, subject to, inter alia, Shareholder approval, 78,210,000 New Ordinary Shares to EBIOSS Energy (the "New EBIOSS Shares") in lieu of cash settlement of the NBL Debt pursuant to the Conversion Agreement, which will result in EBIOSS Energy holding 51 per cent. of the Enlarged Share Capital of REACT



· The New EBIOSS Shares are being issued at a price of 5.53 pence (the "Conversion Price"), which represents a premium of 47.5 per cent. to the closing mid-market share price on 9 January 2017 of REACT of 3.75 pence



· As the Conversion Price is below the nominal value of the Existing Ordinary Shares of €0.10 each, the issue of the New EBIOSS Shares is therefore conditional on, inter alia, Shareholder approval of the Share Capital Reorganisation which will result in each of the Existing Ordinary Shares being divided into and reclassified as one New Ordinary Share of €0.001 and one 2017 Deferred Share of €0.099



· As the issue of the New EBIOSS Shares will result in EBIOSS Energy holding 51 per cent. of the Enlarged Share Capital of REACT, their issue is conditional on, inter alia, Independent Shareholder approval of the waiver of the requirements of Rule 9 of the Irish Takeover Rules that would otherwise arise on EBIOSS Energy to make a general offer to all Shareholders



· At the EGM, the Company is also asking Shareholders to vote on the change of its name to EQTEC PLC



· The Proposals are subject, inter alia, to Shareholder approval of the Resolutions, including the Whitewash Resolution, to be sought at the EGM, convened for 11:30 a.m. on 6 February 2017. A circular will be posted to Shareholders today convening the EGM (the "Circular")

[troutisout] 09/1/2017 20:11

Hi Rod,
Yes and no, I had them down with all the 5 x 250k late sells, when it would seem 2 of those were the last 500k of Edmonton Property's holding as mentioned in post 407.
So yes in terms of the overall overhang and no as in the overhang from GG Eco.

There have been plenty more buys than sells that haven't been used to fill the seller but with today's balance I would be very surprised to see many more, if any, left. The 750k print from yesterday is not included in the RNSs. So I reckon there is about 1.5m of trades to declare

We will see with late reported trades (probably tomorrow), but I reckon we will know within the first hour as I see quite a lot of interest at the moment and this will only grow as the momentum continues and the share price rises.

Trout.

[rodrod1] 09/1/2017 19:34

trout..did today's 2 RNS confirm your holdings assessm t?

[cliveas] 09/1/2017 18:09

Company Is now a totally different proposition to what it was this time last year.

For over a month we have seen high volume of buys largely suppressed by two distressed sellers (now finished imv) creating liquidity for the first time in this share confirming now this is very much on a number of investors radar as undervalued.

Ebioss continues to support providing working capital via an unsecured loan.

Funding has been sourced for Newry (11m) and DD is to be completed anyday now.

Claycross is ready to be moved forward and Enfield has a glimmer of hope with discussions with the new landlord of the site.

Ebioss are moving into the uk in conjunction with chinese funding and Reacts AIM listing is very much on their shopping list in my view.

Been tipped as one to watch and target price of 10p is not out of the question very soon.

(look back at trouts posts as much more informative)

As ever DYOR.

[troutisout] 09/1/2017 14:34

Needs to get above 4p and then it will go to 6p.

Newry News is due and that would transform the valuation and make the market sit up and take note, we have Clay Cross as well 3x the size of Newry.

The great thing with Newry is that is still has the old ROC value and this cannot be had any more, if investors want a project with the largest subsidies, then Newry is one of them as it benefits from historic scheme.

The same is correct with some of the wind turbine portfolio, they managed to register them before the REFIT scheme stopped.

[rodrod1] 09/1/2017 14:30

It was always going to rebound once source of shares emptied. Could easily double on right news

[troutisout] 09/1/2017 14:01

MMs no shares, overhang cleared and we know News is due...........

:o)

[cliveas] 09/1/2017 13:59

Buying gone mental 3.8 paid MM no shares or news leak ?!

GL

[troutisout] 09/1/2017 10:26

Morning all,
With the other 750k print going through GG Eco must have been filled on 2.75m of the 3.7m overhang but there are also many more buys that could be used to fill them if MMs wanted.
So I expect to see them out shortly and an RNS to say so (however may be a few days looking at history of reporting).

I suspect MMs have racked up another 850k-900k of buys so far (Thursday, Friday and today's excess buys compared with sells) on top of the reported fills, so they are all but out in my mind.

Looking forward to RNSs now....

[troutisout] 06/1/2017 18:37

Hi rodrod,
I have looked into the Company in depth but wouldn't say intimately, they are useless at any response and their RNSs are brief and also few and far between.

However Ebioss, the examiner and Planning authorities do give clues and heads up to what is happening. This hit rock bottom (the examinership) and has been slowly moving forward since. Newry news and more about other projects is really important and to see them get finance on some of their projects is paramount.

Anything positive on Enfield site this year would be huge.

Trout.

[rodrod1] 06/1/2017 14:56

trouts - many thanks indeed for your observations on REAC. Its always fascinating to see what someone like you has to say as clearly you know the background intimately.

[troutisout] 06/1/2017 14:10

Looks like the 1.25m might have gone, blue ticks.....

[troutisout] 06/1/2017 11:20

So another 500k bought today, the overhang is clearing and the MMs doing very well out of it, filling the seller at 2.64p and selling them at 3p and now above....

[troutisout] 06/1/2017 08:03

Another 750k sold, leaving 1.7m left, however there were 1.2m buys yesterday so MMs can fill another 450k of that.

Leaving 1.25m shares left in the overhang with GG Eco, still not sure about Edmonton having sold out completely there is 500k that could be either and probably needs to be completed before both are out for good.

Another day like yesterday or better should see them cleared and then can we have some positive Newry news please.

[troutisout] 05/1/2017 09:46

Cyberbub,

Each project is set up as an SPV, Newry Biomass Ltd, Enfield Biomass Ltd, Clay Cross Biomass Ltd, Pluckanes Wind Ltd, etc.

REAC get hold of the sites and take them through leases, planning and off takes, in the case of wind turbine wind testing and environmental trials, in the case of the large Biomas the planning can take a huge amount of time and resource as the waste to energy CHP plants need to be near their market and that generally means houses (a planning permission for a Biomass plant in Plymouth was withdrawn due to local opposition and Clay Cross went to County Council level before it was passed).
Years of work to get the sites ready for financial close. REAC then look at financial close to recoup their investment and have an equity carry in the SPV. In the case of Enfield the £2.7m invested to get it where it was would be returned and REAC hold a reduced equity stake with a mix of debt and finance against the equity of the SPV funding the build.

For the wind turbines it looks like REAC are going to borrow some of the capital needed and use equity for the rest, in the case of Newry, FBD our partner has put in more money to clear the €5.7m bank loan on the previous tech build and so their equity in the SPV has risen to just over 50%. Previous costings on Newry suggested FBD and REAC would give up 50% of the Newry Biomass Ltd Equity to those financing the cost of repowering and the rest would be in debt. The recent HoA has new funding partners and these look to have been introduced by Ebioss so not sure how it will pan out, but I can't imagine they want equity in the company they will want equity in the project, the SPV, that gives them an asset without all the rest of the company.
However Ebioss mention the HoA which they are party to as,

"The signing of this agreement lays the foundations for future collaborations for the financing of other projects in the UK."

So could they take equity in the company? I wouldn't, anyone else that has, has seen it diminish in value hugely, this is a very illiquid share when it wants to be.
The reason I am here is the underlying value (especially if some of these are built and set to work). In this line of business, financial close is everything, it has been a sticking point but it seems Ebioss have a plan. I could see the wind turbines built out and then sold on as a portfolio and Energy from Waste being the focus.

Caveat Emptor this is a risky share with many traders in due to the overhang, but awaiting news on Newry financial close.

[troutisout] 05/1/2017 09:29

cyberbub,

Ebioss who are new partnering REAC with their EQtec technology but also in loans and finding finance have been connected with REAC projects for a long while now.
In the 2015 examinership it emerged that Ebioss had signed HoA for a €6m investment in Enfield (this was before it hit problems with the landlord - story there was Foresight fund were going to be arranging finance for Enfield and then they had the chance to buy the site, they did but then gave REAC a huge rent hike, financial close was put back by Foresight as they collected in a huge monthly rent. This led to REAC starting legal procedures and the examinership. As a result of the examinership REAC dropped the legals and Foresight agreed an equity for debt swap for the rent and the lease agreement between the two was broken. Foresight have recently sold the Company owning the site 'Edmonton Property Company' and the new owners have now sold this stock. REAC mentions discussions with the new owner on moving the project forward which REAC holds planning and offtake contracts for and Ebioss want to build the plant. React have invested £2.7m in Enfield Biomass Ltd).

Anyway Ebioss have made no secret that they would like to seek a listing on either the Paris or the London Aim market. They are based in Bulgaria but listed on Spansih MAB which has been ht by scandal.

Ebioss also have China Energy as a funding partner and have recently announced 4 new sites for refuse waste Biomass in the North East totalling some £240m in build costs.

Best short term scenario would be Ebioss buy REAC, but a lot of stock is owned by creditors that took debt for equity at 11p and the current price is subdued by lack of progress on projects. The underlying value is much higher than the market valuation. Only downer on this is that Ebioss could have taken 12% of the Company from Edmonton Property and GG Eco as they sell into the market.

REAC also have other sites they were looking to put Biomass plants on, Ebioss with China Energy will want to build these out with their new refuse based waste to energy plants.

So Ebioss is a potential buyer but recent selling wasn't picked up by them, so jury out.....

[cyberbub] 04/1/2017 22:59

Trout thanks.My point is that yes all of the Eire turbines plus Newry seem feasible to build in the foreseeable future. But they need to raise so much money compared to their market cap, already have so much debt compared to income (over 20x I think??), and continue to be lossmaking, that the equity is going to struggle to get any value? Will it not just be the debt/bond-holders who make any money here? Or are you thinking that one of the partners will simply buy the REAC equity to take it private and get rid of the complications and costs of maintaining an AIM listing for almost valueless equity? And that a takeout price might be higher than 2p?I am interested in these micro cap strugglers because they can turn around very quickly sometimes. It's often a favourable risk/reward scenario. But I just can't quite work it out with REAC...

[troutisout] 04/1/2017 21:58

Finally
the 8 x 0.5MW wind turbines when built, are each expected to generate €130k of net operating profit per annum.

[troutisout] 04/1/2017 21:57

Sorry trying to do most of this from memory while doing something else,

- Equitix line of credit is £3m to build out small CHP plants (current incentives changes have left this standing still at the moment.

- Newry FBD have just over 50% of the equity in Newry Biomass, previously the Company have stated this with regard Newry and funding/repayment

" Funding package put in place for repowering (discussions already at an advanced stage with a number of parties including the technology providers)
Detailed expenditure to date: The SPV has already spent £11.7 million to date on getting the project to the initial exportation of electricity. This was expended on
• development costs including planning and permitting,
• construction and civil costs,
• mechanical and electrical costs,
• equipment costs,
• grid connection costs, and
• legal and other professional costs
Provided against expenditure to date: An impairment charge of £7.7 million has been made against the carrying value of the asset.
Carried NBV in 2014 audited accounts: The written down carrying value stands at £4.0 million
Cashflow forecast to landmarks:
These numbers are based on deploying the EQTEC technology to repower the plant at 4MW output.
• Capital cost to repower £8m
• Financed by £4m equity with 15% IRR and £4m Debt with 10% coupon and 8 year term
Expected funding sources:
• EcoFinance and Altair
• Technology provider
• Equipment finance from suppliers such as GE
• Third party debt and equity providers

Projected cashflows:
These numbers are based on deploying the EQTEC technology to repower the plant at 4MW output.
• Project Turnover £4m and EBITDA or Net Operating Profit £2M
• Cash Flow from project
 Pays all debt £4m and interest in 8 years with ADSCR of 3.13
 New Equity gets 50% of project generating 15% IRR
 Original equity of £12m on Phase 1 and £4m equity for repowering could be paid back by Year 10
Possible IRR% based on successful final outcome:
The estimated project leveraged IRR is 15%
Executive summary: Newry Biomass is a 4MW Biomass advanced gasification project located in Newry, Co. Down, Northern Ireland. The project is a joint venture with Farmer Business Development plc REACT Energy’s main shareholder.
Planning permission for waste to energy plant converting 25,000 tonnes per annum of Virgin Wood received in May 2009. The project qualified for 1.9 ROC’s under the advanced gasification banding level which is a financial support mechanism employed by the UK government for clean technologies. The project cost Stg£11.7m to construct and has been funded through shareholder equity and loans. REACT Energy plc invested Stg£5.75m and currently retains 49.11% of the economic benefit of the project whilst Farmers Business Development plc has 50.89%.
Due to underperformance of the original gasification technology a decision has been made to repower the project with a new technology. The project is currently on ‘care and maintenance’ programme pending additional funding required to engage a new technology provider.
There has been much interest from parties including technology providers and pension funds that have expressed strong interest in being part of the repowering of the plant from a finance and technology deployment perspective. The opportunity of strong investment returns and positive commercial return from being involved in the repowering of the plant has attracted strong and sustained interest."

[troutisout] 04/1/2017 21:49

Clay Cross and Enfield,

Clay Cross was given planning permission last year and this will be a big project and the build costs will be about €50m. This will be raised by loans and in return for equity in the project, REAC own 90% of this project with our partner Larkfleet Group.

REAC's changed their MO and instead of trying to keep too much of the equity, looked to get their costs of each project back on financial close. This was their stated aim but we haven't seen any financial close since. Holding equity but having large loans is pointless.

Enfield is really an outside chance, they got planning and offtake agreements signed and claim these are some sort of IP that would give them sway in negotiating some sort of free carry in the project. However the site has now been sold by the Foresight fund that was going to finance it and the new owners have recently sold off the shares that were given in lieu if debt.

Talking of debt, they wiped €5.7m of debt last year while in examinership and issued equity at 11p in the debt for equity swap.

They have a £1m secured loan note facility at ridiculous interest and a €2m secured convertible loan note at slightly less interest.
Finally they have the €750 loan from Ebioss that has just been extended another year and with another €600k facility added to it.

So lots of debt, some that needs cleaning up and getting better rates.

However the Newry plant is expected to make €2m net operating profit per annum and it also has planning to expand from 4MW to 8MW effectively being able to double it in size.

[troutisout] 04/1/2017 21:21

The large Biomass plants are what Ebioss is after, we have Newry (which already has been built and had one gasifier installed at the cost of €11m (I think), this didn't work and the site has been run on maintenance since, there was a large bank loan that FBD our partner paid off to give them an increased 49% equity in the project.

Ebioss are providing the new gasifier system and it is onsite. This is the €5.1m large trade payables amount.

They are awaiting €11.2 in funding after completion of DD from the those funding partners.

As for the equity portion, I believe they will be offering equity in the Newry Biomass Ltd SPV, rather than the Company, but there might be some equity deal? The thing is the shares have a nominal value of €0.1, as that is higher than the current price they would not be able to raise at lower than that, so they would have to have to alter the share capital to change the nominal value.
Alternatively they can raise at €0.1, I would be happy with that...Lol

[troutisout] 04/1/2017 21:06

Hi Cyberbub,

I'll try and help,

The current revenues are from the Pluckanes wind turbine and the management fees as you say, the management fees are to do with 3 small Biomass heat plants fitted into three schools, there was at one time a renewable heat incentive but the Government have moved the goalposts. The Company own 30% of these plants, with 70% owned by Equitix Fund, There is a facility to borrow up to £5m from the Equitix fund for new biomass plants and there was a full waiting list of councils, schools and hospitals. The current changes in subsidy seem to have put everything on hold here.

The wind turbine is a 0.8MW and has a 15 year offtake agreement and generates about £130k per annum, there is a £1m bank loan attached to this turbine.
They also have 8 other sites in Eire, all with planning permission for 0.5MW wind turbines on each. Some of these are build ready and the recent results mention looking for a supply deal on the turbines for this. This will be funded by a mixture of bank loans and company equity. I have seen reports from a few years back valuing build ready onshore wind sites as below,

"Valuations for wind turbines are approximately,

€0.4 - €0.7m per MW with planning and consents,
€1m per MW under construction
€1.7m per MW up and running

REAC have Pluckanes 0.8MW up and running, Altilow and Moneygorm (1MW in total) with all consents and build ready and 6 further sites (3MW) with planning permission granted.

I reckon that is the Company's current valuation there without anything else."

[cyberbub] 04/1/2017 20:34

Am still trying to work out the value here, looking at the annual results published before Xmas.* The company says it is making revenue, but this appears to be from just a single wind turbine, plus a few management fees.* The plant and property assets are substantial, but there is a large 'trade payables' liability, does anyone know what it relates to? At least it is in 'non current' liabilities.* The Enfield and Clay Cross facilities still need a lot of funding and have practical issues to overcome.* Newry seems to be probably going to go ahead, but only through investment of both debt and equity. How much equity and at what SP? Surely even a couple of million quid in equity will be a 100% dilution at the current SP? Is that the reason why GC Eco haven't been able to offload their shares to someone else in one go, and have had to sell into the market at whatever (lower and lower) price they can get?On the positive side, the market cap is very low. But there is quite a lot of debt and trade payables. Sorry I am sounding negative, can anyone point out the investment case here?Thanks very much.Cyber

[troutisout] 04/1/2017 18:26

There you go another 250k gone through, they got 2.5p for them, just by raising the offer.

I reckon they have now done 1.25m from the 3.7m in the last RNS, so 2.45m left.....

As I said in an earlier post, it would be good to see them out before Newry News.

[troutisout] 04/1/2017 14:15

Well they have opened up the spread, and are offering 250k at 2.75p but is this the sell order being worked or has that gone already. Could be interesting to see, if the overhang is gone they won't want to keep selling shares down here.....