REACT Energy has signed conditional Heads of Agreement with several parties to potentially fund, through a combination of equity and debt, the repowering of its 4MW biomass gasification project located in Newry, Co. Down, Northern Ireland.
Newry Biomass is owned by Newry Biomass Limited ("NBL") and 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.
The Heads of Agreement envisage a total investment of up to £11.2m to be made both directly, and indirectly through REACT, into NBL, through a combination of debt and equity.
If an agreement is concluded, the equity component of the investment is to be provided by a sub fund of The Ethika Fund SICAV Plc, a Professional Investor Fund ("Ethika"), and Kyotherm SAS a France-based equity investor in biomass, geothermal energy and energy savings projects. Under the terms of the Heads of Agreement, Ethika is also to procure the debt finance for the repowering.
The terms of the Heads of Agreement between the parties are legally binding, however, are subject to the completion of, inter alia, legal, financial and technical due diligence, which is yet to commence and is expected to take approximately 60 days, and therefore may change from that set out in the Heads of Agreement.
There can be no guarantee that definitive agreements will be concluded on the terms currently envisaged or at all, or on the timetable envisaged.