React Energy PLC Repowering of Newry Biomass Limited (6146K)

TIDMREAC

RNS Number : 6146K

React Energy PLC

31 December 2015

31 December 2015

REACT Energy plc

("REACT" or the "Company")

Repowering of Newry Biomass Limited

REACT, the renewable energy developer and operator focusing on the production of clean energy in the UK and Ireland, announces that Newry Biomass Limited ("NBL"), a 50.01% subsidiary of the Company, which owns a Biomass Gasification project located in Newry, Northern Ireland, has entered into an agreement with Spanish MAB-listed EBIOSS Energy AD ("EBIOSS") to purchase its EQTEC Integrated Biomass Gasification Power Plant, with a power output of 4MW, which NBL will use in the repowering of the Newry Biomass gasification project ("Newry Biomass"). The total cost of repowering Newry Biomass, including the gasification power equipment to be purchased from EBIOSS, is estimated to be approximately GBP8 million.

Newry Biomass is a 4MW Biomass gasification project located in Newry, Co. Down, Northern Ireland. The project is a joint venture with Farmer Business Development plc ("Farmers"), the Company's 23.2% shareholder. NBL is a 50.01% subsidiary company of REACT. Planning permission for the waste to energy plant converting 25,000 tonnes per annum of wood was received in May 2009. The project cost GBP11.7 million to construct and was funded through shareholder equity and loans. REACT invested GBP5.75 million and currently retains 49.11% of the economic benefit of the project, whilst Farmers has 50.89%.

Due to underperformance of the original gasification technology, a decision was made to repower the project with a new technology and with a new technology provider. Accordingly, the project was placed on a 'care and maintenance' programme in September 2014, pending additional funding required to engage a new technology provider, which the Company has today chosen. NBL has already exported electricity to the grid however the repowering of the project includes the completion of upgrades, subject to available funding, to the local electricity grid infrastructure which will increase export capacity from the site from 1MW to 4MW.

The gasification equipment purchased from EBIOSS will cost EUR4.963 million, fully payable in cash. It has been contractually agreed between NBL and EBIOSS that the equipment purchased will form part of an Engineer, Procure and Construct ("EPC") contract to be signed between EQTEC Iberia, a subsidiary company of EBIOSS or a company designated by EQTEC Iberia, and NBL. The equipment is currently held in storage by NBL and will be on site in Q1 2016. The credit terms obtained under the purchase and sale agreement of the gasification equipment from EBIOSS provide for full payment by NBL not later than 30 June 2016 and it is the intention of NBL to reach a conclusion on raising all the financing for repowering Newry Biomass (which, as noted above, requires a capital commitment of approximately GBP8 million to be entered into by NBL) before the end of Q1 2016. Once financial close on repowering the project is achieved the Company expects that the plant will be able to again export electricity to the grid within 15 months.

The Company looks forward to making further announcements in due course.

For further information:

 
 REACT Energy plc 
  Gerry Madden / Brendan 
  Halpin                      [phone] 
---------------------------  -------------------- 
 Strand Hanson Limited 
  - Nomad & Broker 
  James Harris / Richard 
  Tulloch / Ritchie Balmer    [phone] 
---------------------------  -------------------- 
 

About REACT:

REACT Energy plc is committed to operating clean electricity and heat generation plants in the UK and Ireland. The Company seeks to identify, build, own and operate renewable projects and possesses significant knowledge of energy markets, clean technologies, fuel sources, project development, project finance and project delivery. REACT currently has four operational clean energy plants generating revenue from the sale of electricity and heat. The generation of clean electricity and heat from sustainable sources has the potential to address the key energy challenges of energy security and carbon commitment and provide strong returns on capital employed.

The Company is quoted on AIM and trades as REAC. Further information on the Company can be found at www.reactenergyplc.com.

About EBIOSS:

EBIOSS Energy, AD is an industrial engineering group and is involved in the engineering, construction, project development and operation of waste-to-synthesis gas plants. It operates at an international level and owns a state of the art technology and differential positioning in designing and construction of waste gasification power plants with power capacity from 500 kW to 10 MW. EBIOSS has developed its own technology, the EQTEC Gasifier Technology (EGT) by which different types of waste are transformed into synthesis gas. This leading technology on waste gasification has made possible the design construction and/or operation of waste gasification plants in Spain, France, Germany, India, Italy and Bulgaria among other countries, for third party international energy groups and for use by EBIOSS itself.

EBIOSS is quoted on MAB the alternative market of the Spanish Stock Exchanges and trades as MAB:EBI. Further information on EBIOSS can be found at www.ebioss.com.

This information is provided by RNS

The company news service from the London Stock Exchange

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December 31, 2015 08:15 ET (13:15 GMT)