Unsecured Convertible Loan Note Facility

RNS Number : 3119G

EQTEC PLC

28 February 2018

 

28 February 2018

EQTEC plc

("EQTEC" or the "Company")

EQTEC Signs Agreements for Unsecured Convertible Loan Note Facility of up to £7.5m to Accelerate Growth Strategy

EQTEC plc (AIM: EQT), the technology solution company for waste gasification to energy projects, is pleased to announce that it has agreed an Unsecured Convertible Loan Note facility of up to £7.5 million ("Loan Notes") with one investor ("the Investor") to help accelerate its growth strategy.

Highlights of the Loan Note facility

·     The Loan Notes will be issued to the Investor in up to five tranches

·     The issue of the first tranche of Loan Notes having an aggregate principal amount of £1.5 million is committed and will close later today

·     Subsequent issues of Loan Notes will be made at the sole discretion of the Company and must be for a minimum of £1.5 million and a maximum of £2 million in principal amount of Loan Notes. 

The growth strategy

The proceeds of the Loan Notes will be used to execute and accelerate EQTEC's growth strategy. A lack of domestic incineration and gasification capacity is forcing the UK to pay European incinerators to take its waste.  EQTEC is well positioned to help alleviate this costly export strategy by converting that waste into energy through its strong pipeline of UK projects and its proprietary advanced gasification technology that can be used in industrial size power plants to convert waste into synthetic gas to generate electricity.

EQTEC also has key strategic partners in place including Fortune 500 company, Energy China, and the recently announced partnership with Cobra Instalaciones Y Servicios SA, to help source new future projects to add to its existing UK pipeline and thereby increasing the UK's capacity to deal with waste.

In addition, the Company will allocate the proceeds of the issue of the Loan Notes towards furthering its existing project portfolio, to avail of possible investment opportunities and for general working capital.

Details of the Loan Notes

The Loan Notes will be issued to a single investor, Bercheva Opportunities Limited, in up to five tranches. Each Loan Note has a subscription price of £23,500 and will be redeemed at par value, being £25,000, five years from the date of issue (the "Maturity Date") unless converted at an earlier date. The issue of the first tranche of Loan Notes having an aggregate principal amount of £1.5 million is committed and will close later today. The Company will receive subscription proceeds of £1,350,000 for this issue and has agreed to pay an arrangement fee of 5% on this and subsequent issues. Subsequent issues of Loan Notes will be made at the sole discretion of the Company and must be for a minimum of £1.5 million and a maximum of £2 million in principal amount of Loan Notes.  The Company can elect to issue Loan Notes every 90 calendar days unless the Company and the Investor agree to vary the issue date. The issue of Loan Notes will require the consent of the Investor where there has been an event of default by the Company or the closing bid price of the Ordinary Shares (as defined below) on AIM is below 1p for any five consecutive trading days.

The Loan Notes are convertible by the Investor at any time before the Maturity Date into ordinary shares of €0.0001 each in the capital of the Company ("Ordinary Shares") at the lesser of: a) 125% of the closing bid-price of an Ordinary Share on AIM one trading day before the date of issue of the relevant Loan Notes being converted; and b) the lowest closing bid price of an Ordinary Share on AIM from the ten trading days immediately prior to notice of conversion being served (the "Conversion Price"). The Investor has undertaken not to dispose of any Ordinary Shares arising from a conversion of Loan Notes on any given trading day if the number of Ordinary Shares disposed would exceed the greater of: (a) 5% of the maximum nominal amount of Ordinary Shares which have been or may be issued on any conversion of Loan Notes issued under the Instrument (assuming conversion of the Loan Notes in full at the Conversion Price(s) prevailing on such trading day); and (b) 20% of the daily trading volume of Ordinary Shares on the relevant trading day, other than in a block transaction.

Upon conversion of a Loan Note, the holder will be granted one warrant to subscribe for an Ordinary Share ("Warrant") for every two Ordinary Shares issued on conversion. The subscription price payable on the exercise of a Warrant will be the lesser of: a) £0.027 per share; or b) 125% of the Conversion Price attributable to the Loan Notes the conversion of which resulted in the grant of the Warrant. Each Warrant will be exercisable at any time prior to the fifth anniversary of the date of issue of the relevant Loan Note. The Warrants have adjustment and anti-dilution provisions in the event of certain changes to the Company's share capital and issues of Ordinary Shares at below the relevant exercise price unless the Investor has been offered a pro rata right to participate in such issue.

The Loan Notes will not bear interest. In certain events of default by the Company or the Company not having sufficient share authorities in place to permit the issue of Ordinary Shares on a conversion of the Loan Notes, the Investor may elect to redeem the Loan Notes for 120 per cent. of the par value of such Loan Notes. In the event of a change of control of the Company, the Company may be required to redeem the Loan Notes at 110 per cent. of the par value of such Loan Notes. The Company can also elect to redeem at any time one or more Loan Notes at a price equal to 105 per cent. of the par value of such Loan Notes, subject to giving the Investor 10 business days' notice, following which the Investor will have the ability to convert some or all of these Loan Notes instead.

This announcement contains information which, prior to its release, was inside information as defined in Article 7 of the EU Market Abuse Regulation No 596/2014 and has been announced in accordance with the Company's obligations under Article 17 of that Regulation.

Enquiries

EQTEC plc	[phone]
Luis Sanchez - Chief Executive Officer Gerry Madden - Finance Director
Northland Capital Partners Limited - Nomad and Joint Broker	[phone]
Dugald J. Carlean / Tom Price
SVS Securities Plc - Joint Broker	[phone]
Tom Curran / Ben Tadd
VSA Capital Limited - Financial Adviser and Joint Broker	[phone]
Andrew Monk / Andrew Raca
Luther Pendragon - Financial PR	[phone]
Harry Chathli / Alexis Gore / Ana Ribeiro

Notes to Editors

About EQTEC plc

EQTEC's business model involves sourcing and providing assistance in developing waste elimination projects to which it will ultimately sell its EQTEC Gasifier Technology ("EGT") and O&M services. EGT enables project developers to construct waste elimination plants and recover electrical and thermal energy from the waste streams.

EQTEC sources projects that have a local supply of waste in need of elimination and conversion. It builds relationships and brings together the developers, the waste owners, the building contractors and funders. It then supplies the energy recovery technology and provides engineering services to the projects. Furthermore, EQTEC will provide O&M services to the operating projects generating recurring revenues over the life of the projects.

The Company is quoted on AIM and trades as EQT. Further information on the Company can be found at www.eqtecplc.com.

 

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