47MW Heat & Power Project Changes Hands

Advanced Waste to Energy Gasification Specialist EQTEC Acquires Deeside RDF Project

Advanced waste gasification specialist EQTEC’s wholly-owned subsidiary, Deeside WTV Limited has signed a Share Purchase Agreement with Logik Developments to acquire full ownership of the Deeside RDF project from Logik through the acquisition of Logik WTE Limited.

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Cork, Ireland headquartered advanced waste gasification specialist EQTEC’s wholly owned subsidiary, Deeside WTV Limited has signed a Share Purchase Agreement (SPA) with UK based strategic land development firm, Logik Developments to acquire full ownership of the Deeside Refuse Derived Fuel (RDF) project from Logik through the acquisition of Logik WTE Limited.

The waste to energy project is part of a portfolio of projects currently under review by a European owner-operator of waste to energy infrastructure, which is expecting completion of final credit review and finalisation of documentation, to provide the financing required for the construction phases and commercially operate the plants and this Project via investment into Deeside.

EQTEC said that assuming the requisite financing is provided, it expects to act as the project developer, providing the design and core advance gasification technology and retain a portion of the O&M contract.

It added that conversations with potential EPC companies are ongoing and the documentation required for tendering the EPC contract for the first phase of the Deeside RDF Project is currently being produced. Once full commercial EPC offers are reviewed and negotiated to contract, a final decision will be reached with regards the funding structure for the Project, on which EQTEC will then provide an update to shareholders.

EQTEC and Logik are said to be progressing discussions about a potential framework collaboration agreement that is expected to cover the keys terms of a proposed cooperation for the development of a portfolio of waste to energy projects that Logik is currently pursuing in the north of England and across the UK.

David Palumbo, CEO of EQTEC, commented:

“We are pleased to have signed this SPA to acquire the Project SPV for the Deeside RDF Project after completing our due diligence, making good progress on funding discussions and shortlisting EPC companies for the Project. We estimate that, with the application of EQTEC’s advanced gasification technology, the Project would convert hundreds of thousands of tonnes per year of non-recyclable everyday household and commercial waste otherwise destined for landfill or incineration.

In this way, EQTEC expects to be able to significantly improve both the economics and the environmental impact of this plant and many traditional waste-to-energy facilities, bringing employment to the local area and economic and environmental benefits to both the local community and large industrial energy users, whilst delivering attractive returns to EQTEC’s shareholders.”

The Project
The Project comprises 6.27ha of land at the Deeside Industrial Estate, which currently has planning permission for a waste management facility comprising the recycling of waste, the production of RDF and an anaerobic digestion facility, in Flintshire, Wales.

EQTEC explained that it is seeking additional planning permission such that its advanced gasification technology can be applied to the Project, which would reduce the environmental impact of the Project, whilst also improving its economics. EQTEC has been in discussions with the local authority, which has been supportive and is keen to utilise EQTEC’s advanced gasification infrastructure as an alternative to incineration technologies.

Subject to additional planning and the requisite financing, EQTEC estimates that, with the application of its advanced gasification technology, the Project would convert hundreds of thousands of tonnes per year of non-recyclable everyday household and commercial waste, otherwise destined for landfill or incineration, into 20MW of electricity and 27MW of thermal heat production.

The electricity and heat could be exported to the grid and/or sold locally. The Company’s preference would be to create private wire and heat networks using the surplus electricity and heat, as it is already aware of interest from a large industrial energy user in the area.

EQTEC estimates that the additional capacity for the thermal conversion of waste, utilising the Group’s advance gasification technology, would generate additional revenues for the Project SPV of c.£16 million in gate fees, c.£6 million in electricity sales and up to £1.5 million in heat sales.

Key terms of the SPA:

• Initial consideration of £2,310,000 of which a deposit amount of £300,000, from which the existing exclusivity payment of £100,000 will be deducted, is payable on signing of the SPA and the balance of £2,010,000 payable on or before a date 12 months from the date of signing of the SPA (and which sum shall be netted off the existing debts of the Project SPV).

• Additional deferred conditional consideration of £2,290,000 payable on the achievement of certain conditions precedent related to development milestones of the Project.

• The issue of a fixed dividend share in the Buyer to Logik, which gives the Logik the right to 5% of distributable profits in the Buyer. This share carries no voting rights in the Buyer.

• An additional development premium or overage payment, subject to a maximum further amount of £5.4 million, calculated in accordance with an agreed formula payable on the achievement of each of the following:

  • Financial close on the funding for the Waste Reception & Anaerobic Digestion plant on the site for which planning and the necessary permits have been obtained (Project Phase I).
  • Financial close as defined on the funding for the Advanced Gasification plant on the site for which planning and the necessary permits have been obtained (Project Phase II).

Neil Spencer, Director of Logik, commented: “LOGIK secured planning on the proposed project site over 12 months ago and, together with EQTEC, we look forward to continuing to work closely with all local stakeholders to help ensure this project gets built and secures additional planning that will further enhance the benefits to the local community. We are very encouraged to be working with a team with the experience and credibility of EQTEC and remain optimistic of what we expect to achieve in Deeside and in further potential collaborations with EQTEC on a portfolio of waste to energy projects that Logik is currently progressing in the north of England and across the UK.”