TIDMINFA
RNS Number : 8677E
Infrastrata PLC
09 July 2019
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the
publication of this announcement via a Regulatory Information
Service, this inside information is now considered to be in the
public domain.
09 July 2019
InfraStrata plc
("InfraStrata" or the "Company")
EXCLUSIVITY AGREEMENT FOR A FLOATING STORAGE AND REGASIFICATION
UNIT OFFSHORE BARROW-IN-FURNESS IN THE UNITED KINGDOM
InfraStrata plc (AIM: INFA), the UK quoted company focused on
the development of natural gas storage capacity, is pleased to
announce that it has entered into an Exclusivity Agreement
("Agreement") with Meridian Holdings Co. ("Promoter"), a Cayman
Islands company, to facilitate the development and an acquisition
of the Promoter's Floating Storage Regasification and Reloading
Unit Project ("FSRU Project") in the United Kingdom.
Background
The FSRU Project involves developing a floating LNG (liquified
natural gas) receiving port offshore Barrow-in-Furness ("Port"),
Cumbria in northwest England, and is designed to deliver
re-gasified volumes of natural gas directly into the UK market via
its own National Transmission System ("NTS") interconnection at
Barrow-in-Furness.
With approximately 30% of the UK's gas supply expected to come
from LNG in the future, the directors of InfraStrata believe the
gas markets are providing a strong economic signal to pursue the
development of facilities such as this FSRU Project. The FSRU
Project is currently understood to be the first of its kind in the
UK. At a projected capacity of approximately 5 million tonnes per
annum, the FSRU Project will not only add to the UK's security of
gas supply but will also help balance the gas network on peak
demand days.
The FSRU Project currently has planning permission and
consenting issued by the Borough of Barrow-in-Furness for its
offshore segment, a detailed review of which the Company is
currently undertaking. Additionally, land parcels and easements
required for the project's onshore above ground installations
("AGIs") and pipelines have been duly acquired or are subject to
the exercise of option agreements held by the Promoter.
Details of the proposal and the Agreement
A typical FSRU project such as this would entail a CAPEX
investment of approximately GBP250 million to GBP400 million with a
construction period of approximately 3 to 4 years. Accordingly,
subject to satisfactory due diligence and final contract,
InfraStrata, through its wholly owned subsidiary InfraStrata Energy
UK Ltd, will be seeking investors to provide the necessary project
and investment finance to enable an acquisition of the FSRU Project
that would include all of the above assets of the FSRU Project, in
addition to all the engineering data that the Promoter has
accumulated to date. It is envisaged that the third-party project
investors being sought would take equity stakes in InfraStrata
Energy UK Ltd, reducing InfraStrata to a minority stake, prior to
acquisition of the FSRU Project by InfraStrata Energy UK Ltd.
Similar to the Islandmagee Gas Storage Project, InfraStrata will
seek an ongoing project management role along with a minority
equity interest in the FSRU Project.
Under the terms of the Agreement, the Company will have
exclusivity for a minimum of three months (with extensions
possible) in order to undertake the necessary technical, commercial
and regulatory due diligence required to determine the FSRU
Project's feasibility. After satisfactory completion of due
diligence, the Company will proceed to structure a formal
acquisition of the FSRU Project by InfraStrata UK Energy Ltd with
the backing of consortium investors and/or project financiers. The
Agreement shall terminate after 12 months, unless terminated
earlier pursuant to its terms and there is no guarantee at this
stage that any investment in or acquisition of the FSRU Project
will ultimately proceed.
Under the terms of the Agreement, if the parties agree to
proceed to a formal contractual agreement following the due
diligence phase, staged consideration payments have been agreed as
follows:
1) the issue to the Promoter of 25 million new ordinary shares
in the Company upon the agreement of a term sheet to proceed with
further exclusivity and to negotiate a formal Sale and Purchase
Agreement;
2) the issue to the Promoter of a further 75 million new
ordinary shares in the Company at Final Investment Decision ("FID")
(FID being when third party project investors commit to funding the
development and construction of the FSRU Project to achieve
commercial operations) and the decision to proceed to FID is at the
sole discretion of the Company; and
3) a cash consideration payable upon completion of the
acquisition (not expected prior to FID and therefore not prior to
the necessary funding being received by InfraStrata Energy UK Ltd)
equal to the value of the FSRU Project determined by the parties
which exceeds the value of the 100 million new ordinary shares in
the Company to be issued to the Promoter as per 1) and 2)
above.
The 100 million new shares in the Company to be issued to the
Promoter on the terms above would be issued at the volume weighted
average market price prevailing for the seven trading days prior to
FID.
As announced in its strategy update on 04 July 2019, the Company
intends on progressing with multiple projects at various stages in
a project's life cycle. The FSRU Project not only provides the
Company's prospective clients with direct exposure to the UK gas
market but also complements the Company's currently on-going
Islandmagee Gas Storage Project.
John Wood, Chief Executive Officer commented: "We are very
pleased to enter into this Exclusivity Agreement with Meridian
Holdings. The UK gas market is witnessing a significant shift in
its supply stack and LNG is set to form an important part. As an
energy infrastructure company, we are looking at not only building
a diverse portfolio of assets but also creating the ability for
each asset to complement the others. Such a strategy adds
significant trading value to our prospective clients who themselves
have a portfolio of energy contracts to monetise."
Further updates will be provided as soon as possible as
discussions and the project progress.
For further information, please contact:
InfraStrata plc c/o Yellow Jersey
John Wood, Chief Executive and Interim +44 (0)20 3004
Chairman 9512
Allenby Capital Limited (AIM Nominated
Adviser & Broker) +44 (0)20 3328
Jeremy Porter / Liz Kirchner 5656
Yellow Jersey +44 (0)20 3004
Tim Thompson / Henry Wilkinson 9512
-ENDS-
Notes to editors:
InfraStrata is an independent gas storage company focused on the
UK and Ireland. Further information is available on the Company's
website: www.infrastrataplc.com
Background on the Islandmagee Storage Project
The Islandmagee gas storage project is a proposed salt cavern
gas storage facility located on Islandmagee in County Antrim,
Northern Ireland. The Board of InfraStrata believes that the
proposed 500 million cubic metres natural gas cavern storage
facility will provide over 25% of the UK's natural gas storage once
constructed. The facility will be situated adjacent to the Scotland
Northern Ireland (gas) Pipeline (SNIP) and the Moyle 500-megawatt
electricity interconnector. Work commenced in 2007 with the
acquisition of 3D seismic data to image the Permian salt in the
Larne Lough area. During 2012, planning permission was granted for
the project and a gas storage licence was issued by the Utility
Regulator. In 2015 a well was drilled to core the salt and confirm
the technical feasibility of the project, supported in part by the
European Commission. The Front-End Engineering and Design (FEED)
element of the Project was completed in November 2018 and the FEED
report was submitted to the European Union in December 2018 in
accordance with the Company's grant conditions. To date
approximately GBP14.5m has been invested in the project.
Further information is available on the company's
website:www.infrastrataplc.com
The Front-End Engineering & Design (FEED) and Insitu
Downhole Testing programme for the Islandmagee gas storage project
is co-financed by the European Union's Connecting Europe
Facility.
Disclaimer releasing the European Union from any liability in
terms of the content of the dissemination materials:
"The sole responsibility of this publication lies with the
author. The European Union is not responsible for any use that may
be made of the information contained therein."
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END
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