Gasification tech solutions company, EQTEC plc (AIM:EQT), announced that it has signed a Share Purchase Agreement to take full ownership of the Deeside Refuse Derived Fuel Project, via the acquisition of Logik WTE Limited.
The company said this latest acquisition is part of a portfolio under review of waste to energy infrastructure. Assuming the requisite financing is in place, EQTEC expects to act as the project’s developer, providing design and core advance gasification tech, and retaining a portion of the O&M contract.
EQTEC said 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 EPC offers are reviewed, the company will reach a final decision on the project’s funding structure.
Further, the company and Logik are also in discussions about a framework collaboration agreement, covering proposed cooperation for the development of a portfolio of waste to energy projects Logik is currently pursuing across the UK.
Commenting on today’s acquisition, David Palumbo, CEO of EQTEC, said: “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 Deeside RDF Project is made up of 6.27 hectares of land at the Deeside Industrial Estate. The company said that its seeking additional planning permission, in order for its gasification etch to be applied to the project, and reduce its potential environmental and cost impact.
At present, EQTEC predicts the project will convert hundreds of thousands of tonnes of non-recyclable waste per year, into 20MW of green electricity – enough to power 37,500 homes and 27MW of thermal heat production.
The company said that the electricity and heat could be exported to the grid or sold locally. It added that its 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.
The company’s statement added that: “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.”
The SPA is set to take place for an initial consideration of £2.31 million, with a £300,000 deposit and the outstanding balance payable within 12 months of signing the SPA. Following this, there will be a deferred conditional consideration of £2.29 million which will be paid upon the project achieving certain milestones.
Additionally, a fixed dividend share will be issued to Logik, giving it the right to 5% of distributable EQTEC profits – though no voting rights in the company. Finally, there will be an additional development premium or overage payment, ‘subject to a maximum further amount’ of £5.4 million, payable on the achievement of two financial conditions.
Neil Spencer, Director of Logik, added: “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.”