12 October 2022

EQTEC plc

("EQTEC", the "Company" or the "Group")

North Fork project finance restructuring toward full funding

EQTEC plc (AIM: EQT), a global technology innovator powering distributed, decarbonised, new energy infrastructure through its waste-to-value solutions for hydrogen, biofuels, and energy generation, announces that North Fork Community Power, LLC ("NFCP") has entered into an agreement for a financial restructuring with the project lenders ("Lenders"), for the provision of a standby facility, in the amount of USD 4.3 million,  towards full funding of the project up to the commercial operations date ("COD") of a plant, with EQTEC technology at its core, in North Fork California, USA (the "Plant").

The third-party funding has been agreed as part of a pre-negotiated petition filed by NFCP for relief under Chapter 11 of the US Bankruptcy Code, following alignment between NFCP managing members, including the Company, with the Lenders. The agreed terms specify funding for the Plant construction and commissioning, and for recruitment, training and onboarding of the Plant operations staff, as well as for legal and other costs associated with the Chapter 11 process itself.

The terms also specify that the Company will remain as an equity shareholder in NFCP with the final shareholding being determined during the legal process. However, any further drawdown on the convertible loan facility committed by the Company in 2021, of which c. USD 1.5 million remains undrawn, will no longer apply thereby preserving the Company's financial resources. The Company has no plans to make any further investments into NFCP.

COD for the Plant is expected in Q3 2023 and the power purchase agreement ("PPA") has been extended accordingly. Once the Plant is fully operational, NFCP has a range of options for refinancing the Plant, including but not limited to sales of the tax credit, traditional asset finance by banks and public sector loans. All are currently under review and consideration by NFCP.

David Palumbo, CEO of EQTEC, commented:

"I am pleased we have reached a practicable arrangement for completion of the North Fork project, one of the longest-standing projects in our portfolio and a seminal facility for California, Phoenix Energy and for EQTEC in the USA. Our dedication to the North Fork community and to the prevention of forest fires across the state more generally has been evident in our investment and engagement with the project well beyond our typical remit. Our partners, Phoenix Energy, have demonstrated similar commitment, and the flexibility and support from Lapis is a testament to the import of this first, reference project under the BioMAT programme. I am delighted not only that we can progress the project but that we will now take it to completion with dedicated partners who also have at heart the interests of the community and of sustainable, green energy production."

About the NFCP project

The NFCP project will result in a 2MWe biomass-to-energy plant based on EQTEC syngas technology that will transform locally sourced forestry waste into power and biochar for the local community. The project has encountered successive delays since late 2021 as consequences of the Covid-19 pandemic and one of the largest wildfires in the State's history near the construction site. Shipping delays, legally enforced work stoppages during fire warnings and COVID lockdowns have all undermined progress. Despite this, all EQTEC technology was delivered, and construction continues.

The Company in December 2021 announced a new partnership with Phoenix, NFCDC and Carbonfuture GmbH to help Sierra Nevada communities sequester carbon, reduce wildfire risk, generate green energy, create jobs and support the local community whilst generating tradeable carbon credits.

On 14 October 2021, the Company announced agreement with NFCP and the Lenders, Lapis Advisers, LP, to invest an additional c. US$2.8 million in the NFCP project, increasing the Company's equity in the project to 49%. The Company has also provided a US$4.5 million convertible loan facility to fund the development of the Project.

Catastrophic wildfires in California have made clear the urgency of forest management efforts that reduce risk and improve forest health. NFCP is a forest-based biomass gasification plant that will utilize sustainable local forest biomass as well as fire threat reduction activities from the Sierra and Yosemite National Forest areas which will benefit local communities. 

The project is located on the site of an abandoned sawmill from the 1990s, bringing back sustainable jobs to this rural community in the Sierra Nevada. The project originated by the North Fork Community Development Council to both steward the environment and promote economic redevelopment in the wake of the sawmill closing. 

Thanks to the proprietary Advanced Gasification Technology developed and supplied by EQTEC, which is also a material capital investor in the North Fork project, the process does not burn wood and so the CO2 does not go up a stack. The waste wood is transformed through EQTEC's patented process, into a hydrogen-rich synthesis gas 'syngas' as it is reduced into a solid carbon biochar. The process will generate 2MWe of renewable electricity and biochar.  Once produced, biochar is sold mostly to farms in California's Central Valley to improve water efficiency, nutrient conservation, beneficial microbial composition, and overall quantity of stable organic matter. As the carbon remains in the soil permanently it becomes an important tool of carbon sequestration ability as well as other ecosystem benefits. The produced biochar will help sequester 20,000 tonnes CO2 equivalent over the next five years. 

ENQUIRIES

This announcement contains inside information as defined in Article 7 of the EU Market Abuse Regulation No    596/2014, as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended, and has been announced in accordance with the Company's obligations under Article 17 of that Regulation.

About EQTEC plc 

As one of the world's most experienced gasification technology and engineering companies, with a growing track record of delivering operational and commercial success for transforming waste-to-energy through best-in-class technology innovation, engineering and project development, EQTEC brings together design innovation, project delivery discipline and solid commercial experience to add momentum to the global energy transition. EQTEC's proven, proprietary and patented technology is at the centre of clean energy projects, sourcing local waste, championing local businesses, creating local jobs and supporting the transition to localised, decentralised and resilient energy systems. 

EQTEC designs, supplies and builds advanced gasification facilities in the UK, EU and US, with highly efficient equipment that is modular and scalable from 1MW to 30MW. EQTEC's versatile solutions process over 50 varieties of feedstock, including forestry wood waste, vegetation and other agricultural waste from farmers, industrial waste and sludge from factories and municipal waste, all with no hazardous or toxic emissions. EQTEC's solutions produce a pure, high-quality synthesis gas ("syngas") that can be used for the widest range of applications, including the generation of electricity and heat, production of synthetic natural gas (through methanation) or biofuels (through Fischer-Tropsch, gas-to-liquid processing) and reforming of hydrogen. 

EQTEC's technology integration capabilities enable the Group to lead collaborative ecosystems of qualified partners and to build sustainable waste reduction and green energy infrastructure around the world. 

The Company is quoted on AIM (ticker: EQT) and the London Stock Exchange has awarded EQTEC the Green Economy Mark, which recognises listed companies with 50% or more of revenues from environmental/green solutions. 

Further information on the Company can be found at www.eqtec.com.