EQTEC plc (LON:EQT) Chief Executive Officer Ian Price caught up with DirectorsTalk for an exclusive interview to discuss the agreement to acquire 19.99% ownership of North Fork Community Power.
Q1: Now, the Company has signed a legally binding agreement with Phoenix and North Fork Community Development Council to acquire 19.99% ownership of North Fork Community Power. What benefits will this bring to EQTEC?
A1: This deal is the next to be delivered under the framework agreement we announced recently with Phoenix Energy, our strategic partner in the US. It’s a template of how we want to work with our partners inside this framework agreement arrangement, particularly where projects are close to contract signature, all the necessary agreements are in place and where we can make an impact on the process by taking strategic equity position.
The North Fork project is exactly that, our equity position accelerates the delivery of the project and we expect to sign that contract and begin work by the end of June 2019.
We’ll also benefit from receiving dividends from the strong cash flow that’s in the project once it’s operational and the initial investment is paid back.
In summary, the ownership position in the project will help build the balance sheet for the company and also, give us access to long term recurring revenues.
We’re also extremely pleased with the partnership developed with Phoenix Energy and we’re already in discussions with them to assist on the execution on another project within the framework agreement, that’s a 3 megawatt plant in Wilseyville, California.
So, it’s a real advantage for us developing a pipeline of projects with the same partner as we’re able to progress developments and contracts much more quickly with a standardised process for document delivery and execution.
Q2: The company expects to invoice NFCP, under a separate sales contract, for the sale of further equipment and the supply of engineering and design services to NFCP. Can you expand on this for us?
A2: So, as well as the supply of equipment we have in stock that we’re supplying from the project, there’s also a requirement to provide some additional new equipment which is under the scope of our supply.
So, we’ll be delivering the engineering design for the project with construction to commence almost immediately and this will bring around about €2.2 million for the company.
These revenues will be delivered over the next 6-12 months as we progress with the construction of the project according to its delivery milestones and we start off by receiving a 25% fee at contract signature, the rest of the payments as per the scheduled milestones.
Q3: EQTEC has a key emphasis on expansion and growth, what are the main targets for the remainder of 2019?
A3: As we’ve emphasised recently, with our focus on our 3 business verticals, our targets are really to delivery the framework agreements with these key strategic partners to set up the business, to deliver the contracts and revenues that our shareholders are looking for and rightly, expect.
We anticipate a number of other JV agreements with established partners in the coming weeks and the importance of these partnerships really is about credibility and access to local resources of the partners. Also, it secures us a pipeline of contracts in 2019 and beyond which are ready to be executed or very close to being ready to be executed. We look forward to talking about those in more detail in the months ahead.
Just in summary, I’d like to just say there’s an incredible amount of work that’s gone into selecting and settling these partnerships up and I’m confident that this investment of time and effort will pay serious dividends going forward.
I want to thank the wider team of the company for relentless work and especially our long term shareholders for their patience and support. We understand that in AIM, expectations are always inside a compressed time and rest assured, currently we’re building the foundations of a business that can be sustained in the long run and give us the growth we’re all expecting.