EQTEC plc (LON:EQT), the technology solution company for waste gasification to energy projects, has today announced that, further to the Company’s announcement of 4 June 2019, it has signed an Equipment Sale and Services Contract with North Fork Community Project LLC.
As announced on 4 June 2019, the Company entered into a legally binding agreement to acquire a 19.99% interest in NFCP, a special purpose vehicle formed to build and operate a 2MW biomass project in North Fork, California. The Equipment Sale and Services Contract, with a sales value of €2.2 million to the Company, has now been executed by all parties.
Under the terms of the Equipment Sale and Services Contract, EQTEC will provide equipment and the supply of engineering and design services to NFCP such that the Project can produce synthetic gas in sufficient quality and quantity to achieve 2MW on a continuous basis.
The Project represents the Company’s first joint venture under the framework agreement with Phoenix Biomass Energy Inc. (“Phoenix”) announced on 22 May 2019.
North Fork Project Highlights
· Equipment Sale and Services Contract with NFCP signed, with a sales value of €2.2m to EQTEC, payable in stages according to a schedule of certain agreed milestones, with the first payment being €880,000 on financial close;
· On 23 July 2019, the SPV was granted final approval by the State of California to issue tax-exempt bonds totalling US$9.3 million and non-tax-exempt bonds totalling US$5.5 million, a key milestone before such bonds can be issued to investors. The proceeds of the bond issue, once subscribed for together with EQTEC’s investment in-kind of US$2.5 million, is expected to enable the Project to reach financial close which is anticipated during October 2019; and
· The existing members of NFCP, together with EQTEC, are currently finalising the Interest Purchase Agreement and the Operating Agreement that will govern EQTEC’s 19.9% ownership of the Project and its involvement as a Managing Member of NFCP. These agreements, together with the issue of the 19.9% interest in NFCP, will be executed on financial close.
Further announcements will be made in due course.
Phoenix NAPA Project Update
On 15 January 2019, the Company announced that it had signed its first equipment purchase contract with Phoenix, in relation to a power plant located in Napa County, California, USA (the “NAPA Project”). On 9 April 2019, the Company announced that it had successfully delivered and invoiced, the engineering design work for the power plant. Full payment was received by the Company shortly thereafter. Commencement of construction was expected to begin in 2019 upon final granting of permits to Phoenix. However, the Company has been informed that these are now expected to be received in Q1 2020 as explained below.
NAPA Project Highlights
· The Company has been informed that the NAPA Project SPV has decided to relocate the project to an adjacent site to accommodate a larger 2MW capacity power plant, with the planning having already been resubmitted in July;
· Planning permits are expected to be in place in Q1 2020 and construction and installation is intended to start immediately after receipt;
· EQTEC representatives met with the project owners, who are part of a consortium put together by, and including, Phoenix and it was indicated that the project will be financed by the consortium using their own financial resources and it is not expected that external investment will be required to achieve financial close; and
· The Company was also informed that this project is of significant strategic importance for the local government with regard to the elimination of waste as legislation was passed in 2019 banning the disposal of waste wood to landfill.
Ian Pearson, Chairman of EQTEC, commented:
“We are delighted that we have finalised the sales contract with North Fork. This, together with the approval of the financing bonds, is testament to the hard work that both the Phoenix and EQTEC teams have put in to ensure that this project, in which we will have a significant equity interest, reaches financial close.
“This is a significant step for EQTEC, and is of strategic importance to our business in the USA, in order to unlock the opportunity of recovering clean energy from biomass. It is also a meaningful milestone on our journey to become the de facto technology solution for those wishing to recover clean energy from the elimination of waste.
“I believe that our partnership with Phoenix in the USA will continue to provide further benefits going forward as we execute our defined growth strategy.”
Greg Stangl, Chief Executive Officer of Phoenix, commented:
“We continue to be delighted to have EQTEC as a partner. The North Fork project demonstrates how working closely together we can achieve our joint vision of a repeatable, scalable technology solution that could have a big impact on California’s climate challenges and allow us to jointly exploit what we know to be significant opportunities for both parties in the California and global biomass distributed energy markets.
“We continue to look at other pipeline project opportunities with EQTEC as we develop our working relationship in the US market.”