TIDMREAC
RNS Number : 1790T
React Energy PLC
15 July 2015
15 July 2015
REACT Energy plc
("REACT" or the "Company")
Exit from Examinership
Issue of GBP1,000,000 secured loan facility
REACT Energy plc (AIM:REAC), the energy infrastructure developer
and operator which focuses on the production of clean energy in the
UK and Ireland, today announces the Company's successful approval
of the Scheme of Arrangement by the High Court in Dublin to be
followed by its exit from the examinership process. The Company
also announces the issue of GBP1,000,000 (before expenses) of a
secured loan facility ("SLF") to fund on-going working capital
requirements.
Summary:
-- Successful exit from examination after the Scheme of
Arrangement with creditors was approved by the High Court on 14
July 2015, with the Scheme becoming effective on Friday 24 July
2015;
-- Successful completion of GBP1,000,000 secured loan facility to fund on-going working capital requirements;
-- Project funding platform for development of project pipeline
to be agreed with the assistance of EcoFinance (GLI) Limited
("EcoFinance") and Altair Group Investment Ltd ("Altair");
-- As part of the Scheme of Arrangement the Company will issue
37,470,972 new Ordinary Shares to creditors of the Company and
related companies through a debt for equity conversion
-- The approval of the Scheme results in c. EUR5.7 million of
debt being removed from the Group's balance sheet;
-- Warrants with a total maximum share subscription value of c.
GBP4.7 million issued as part of the transaction to EcoFinance and
Altair
Approved scheme of arrangement
On 14 July 2015, the High Court ("the Court Approval Date")
approved the Scheme of Arrangement (the "Scheme") as presented by
the Examiner appointed to REACT and its related companies. The
Scheme becomes effective in accordance with its terms on Friday 24
July at 5.00pm ("the Effective Date"). The SLF investment from
EcoFinance is now unconditional.
Details of the terms of the Scheme:
-- REACT will issue 37,470,972 new Ordinary Shares to creditors
of the Company and its related companies to the value of
EUR5,724,732 (giving an effective price per share of 11p) through a
debt for equity exchange
-- Altair Group Investment Limited ("Altair" or "the Secured
Creditor") provided funding to REACT by way of a loan agreement to
finance the Examinership process, which was announced on 13 May
2015. The existing secured debt held by Altair, comprising the 9%
Secured Loan Note of GBP1.5 million issued in 2014 and the
Examinership financing facility of EUR500,000, is refinanced by way
of a new 7.5% GBP2 million Convertible Secured Loan Note ("CSLN")
and is secured by the same security package granted in favour of
EcoFinance. This will be governed by an inter creditor deed under
which the SLN security plus interest and costs shall rank in
priority to the CSLN security plus interest and costs. Under the
terms of the CSLN, the Secured Creditor has the right to convert up
to GBP1 million into new Ordinary Shares at GBP0.10p. It has also
been granted an exercisable right in the form of an equity kicker
of up to 3,529,412 new Ordinary Shares on the same basis as
EcoFinance as outlined below
-- The Company has granted 3,150,000 Warrants to Origen Capital
Partners LLP, an entity related to Altair, on drawdown of the SLN.
These Warrants entitle the holders to subscribe for new Ordinary
Shares in the capital of REACT at an exercise price of GBP0.10 per
share. These Warrants are assignable and capable of being exercised
for a period of seven years from the date on which the SLN is drawn
down
-- The Unsecured Convertible Loan Note Holder, FBD, will convert
EUR1,742,027 to new Ordinary Shares at GBP0.11p per share, in line
with the closing price on 1 December, the date on which the
Company's shares were suspended from trading on AIM. FBD will be
issued 11,402,360 new Ordinary Shares
-- The Revenue Commissioners, will be paid amounts owing to them
of EUR4,350 within the Effective Date
-- The Preferential Creditors, which include Revenue
Commissioners and current employees, will receive a cash dividend
on the 12 month anniversary of the Effective Date equivalent to the
sale of that number of shares which would have equated to their
debt converted at GBP0.11p per share in line with the closing price
when the Company's shares were suspended from trading. New Ordinary
Shares of 1,217,254 equivalent to the total preferential debt of
EUR185,969 will be issued to the Trustee at a share price of
GBP0.11p per share. On the 12 month anniversary of the Effective
Date, the Trustee will dispose of the shares in the market and
distribute the proceeds to the Preferential Creditors having
accounted for any and all taxes then falling due
-- The liability due to Unsecured Creditors and Rent Creditors
of EUR3,796,736 shall be converted to 24,851,358 shares at GBP0.11p
per share in line with the closing price when shares were
suspended
-- Contingent Guarantee Creditors will have past agreed
liabilities, payable from the relevant companies where the
liability arose, converted to shares at GBP0.11p per share. As a
result the Company will be released from any guarantees that it has
entered into
-- As part of the Scheme, the Company has ceased to pursue the
legal action, which was announced on the 3 June 2015, in relation
to the Enfield Biomass Limited property lease agreement and has
agreed to the revocation of the existing lease on that site. New
discussions in relation to the future of this site will be
commenced shortly and further updates will be made as required
-- Scheme protocol agreed for disputed Creditors amounting of
approximately EUR164k. The Company has sought claims from the
disputed Creditors which have in the majority been agreed. Some
remain to be resolved. An unagreed Creditor of any company in the
Group may forward to the Company Secretary, within 21 days of the
Effective Date, a proof of claim setting out the amount which it
believes should be included as its claim for the purposes of the
Proposals and the basis for the claim including supporting
documents as applicable. The Company may issue additional new
ordinary shares to settle the outstanding disputed Creditors
claims.
37,470,972 new Ordinary Shares will be issued to the relevant
Creditors and held by the Trustee on their behalf. The Trustee will
enter into a 'Lock-in' restriction on behalf of the Creditors,
whereby they are unable to dispose of the new Ordinary Shares that
they will receive pursuant to the Scheme for a period of one year
from the date of Admission..
Secured Loan Facility
The Board of REACT announces that it has raised GBP1,000,000
(before expenses) through a SLF. EcoFinance, a group which sources
finance for renewable energy projects, has provided the SLF.
The SLF is at a fixed rate of 15% per annum, the interest on
which will be paid monthly in arrears. The SLF is for a five-year
term and the principle together with any accrued interest will be
repayable by a bullet repayment at the end of the term. The SLF is
secured by mortgage debentures, cross guarantees and share pledges
over REACT and its subsidiary companies.
An exercisable right in the form of an equity kicker is attached
to the SLF whereby 60 days from the drawdown under the SLF,
EcoFinance has the right to an amount of fully paid new ordinary
shares in the Company. The monetary value of the exercisable right
will be determined by the following formula:
-- 9 million x (Average Share Price minus 10p), where the
Average Share Price is the arithmetic average of the Company's
closing share price on each of the 60 days following
re-commencement of trading in the Company's shares. The value of
this right has a cap of GBP600,000 and a floor of GBP200,000. The
maximum number of shares issuable under this mechanism is 3,529,412
Ordinary Shares in the Company
35,300,000 Warrants are to be granted to Nirvana Capital Limited
("Nirvana") (or such company as Nirvana may direct), a company
related to EcoFinance on drawdown of the SLF, subject to any
necessary shareholder and other regulatory requirements. These
Warrants will entitle the holders to subscribe for new ordinary
shares in the capital of REACT at an exercise price of GBP0.10 per
share. These Warrants are assignable and capable of being exercised
for a period of seven years from the date on which the Loan
Facility is drawn down
Effect of the Scheme on the Company and shareholders
Following the approval of the Scheme creditors will be issued
with 37,470,972 new Ordinary Shares in the Company, which after
issue will amount to c. 55% of the enlarged issued share capital.
This is as a result of the conversion of EUR5.7 million of debt
into equity.
The Company has prepared a pro-forma unaudited consolidated
balance sheet as at 14 July 2015and is presented below for
illustrative purposes only: :
REACT ENERGY PLC
PRO-FORMA UNAUDITED CONSOLIDATED BALANCE Pro-forma
SHEET Unaudited Audited
14 July 2015 30 June 2014
EURO EURO
ASSETS
Non-Current Assets
Investment in property, plant and
equipment and projects 7,365,255 1,897,959
Assets relating to liquidated companies - 391,304
Total non-current assets 7,365,255 2,289,263
Current assets
Trade and other receivables 42,368 163,917
Cash and bank balances 1,477,644 744,442
Current assets relating to liquidated
companies - 599
Total current assets 1,520,012 908,958
TOTAL ASSETS 8,885,266 3,198,221
EQUITY AND LIABILITIES
Equity
Share Capital 16,753,246 13,006,149
Share Premium 22,691,272 20,713,637
Retained Earnings - Deficit (39,412,889) (43,404,358)
31,629 (9,684,572)
Non-controlling interests representing
partner's shareholdings in projects 2,884,350 -
Total equity 2,915,979 (9,684,572)
Non-current liabilities
EcoFinance 15% SLF 1,388,889 -
Altair 7.5% CSLN 2,777,778 -
Senior bank loan in respect of wind
turbine 1,098,500 1,135,000
BES Shares 105,000 105,000
Total non-current liabilities 5,370,167 1,240,000
Current liabilities
Trade and other payables including
professional fees 566,371 2,134,725
FBD 5% CLN - 1,669,880
Altair 9% SLN - 1,876,126
12% Loan Note - 91,257
15% Shareholders' loan - 155,139
Senior bank loan in respect of wind
turbine 32,750 15,000
Current liabilities relating to liquidated
companies - 5,700,666
Total current liabilities 599,121 11,642,793
TOTAL EQUITY AND LIABILITIES 8,885,266 3,198,221
Concert parties
EcoFinance, Nirvana and Altair have entered into separate
agreements in relation to financing provided to the Company. These
agreements include the following:
-- Nirvana has granted to Altair an option to acquire the full
economic benefit of up to 8,825,000 of the Warrants to be granted
to Nirvana at a price of GBP0.08. This option may be exercised by
Altair for a period of 120 days from the Effective Date; and
-- EcoFinance has granted to Altair an option to acquire the
benefit and security of the GBP1,000,000 SLF. This is a one-year
option and the price of the option increases from GBP1,006,250 to
GBP1,100,000 depending on the time of exercise.
Irish Takeover Panel
EcoFinance, Nirvana and Altair (including their respective
related parties) have entered into agreements resulting in them
being deemed as parties acting together or in concert. The
combination of equity kickers, warrants and conversion rights that
could be exercised by these parties could mean that their combined
future shareholdings could exceed 30%. The Company has obtained a
waiver of Rule 9.1 (a) from the Irish Take Over Panel in respect of
the obligation to make a mandatory offer for the entire issued and
to be issued share capital of the Company not already held by
EcoFinance, Nirvana and Altair (including their respective related
parties), conditional upon the approval by a majority of the
independent shareholders of REACT in a poll. The Company expects to
publish a whitewash circular to be issued to shareholders seeking
such approval by on or around 10 August 2015.
Interests in REACT shares
Following the Scheme (following the issue of 37,470,972 new
Ordinary Shares) the following REACT shareholders will have
an interest in excess of three per cent. in the ordinary
shares:
Number of Percentage (%) of
shares issued share capital
held following the Scheme
Farmer Business Developments
plc 17,396,295 25.53
GG Eco Solutions Limited 5,263,158 7.72
Carnmeen Energy Limited 5,093,875 7.48
Ronan Barrett 4,096,962 6.01
Edmonton Property Company
Limited 3,774,546 5.54
UK Power Networks Limited 2,181,818 3.20
Tim O'Keeffe 2,111,100 3.10
In addition, following the Scheme the following REACT Directors
will have an interest in the ordinary shares:
Number of Percentage (%) of
shares issued share capital
held following the Scheme
Edward Barrett 1,868,063 2.74
Brendan Halpin 1,142,910 1.68
Gerry Madden 817,140 1.20
Dermot O'Connell 570,109 0.84
Pursuant to the Scheme, an application will be made for the
admission of 37,470,972 new Ordinary Shares of EUR0.10 each in
REACT to trading on AIM. The new Ordinary Shares, which will be
issued, fully paid, will rank pari passu in all respects with the
existing ordinary shares of REACT. Admission of the new Ordinary
Shares to trading on AIM is expected to occur on or around 31 July
2014.
As a result of the Scheme, REACT's total issued and voting share
capital will comprise 68,140,494 ordinary shares. Shareholders
should use this figure as the denominator for the calculations by
which they will determine if they are required to notify their
interest in, or a change to their interest in the Company, under
the FCA's Disclosure and Transparency Rules.
- Ends -
For further information:
+353 (0)21 483
REACT Energy plc 9104
Gerry Madden / Brendan Halpin
+44 (0)20 7408
Shore Capital - Nomad & Broker 4090
Pascal Keane / Anita Ghanekar
About REACT
REACT Energy plc is committed to operating clean electricity and
heat generation plants in the UK and Ireland.
The Company identifies, builds owns and operates plants and
possesses significant knowledge of energy markets, clean
technologies, fuel sources, project development, project finance
and project delivery.
REACT currently has four operational clean energy plants
generating revenue from the sale of electricity and heat.
The generation of clean electricity and heat from sustainable
sources has the potential to address the key energy challenges of
energy security and carbon commitment and provide strong returns on
capital employed.
The company is listed on AIM and trades as
REAC.www.reactenergyplc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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