30 May 2019
Quadrise Fuels International plc
("Quadrise", "QFI" or the "Company")
Memorandum of Agreement with Al Khafrah Holding Group
Quadrise is pleased to announce that the Company has entered into a Memorandum of Agreement ("MOA") with the Al Khafrah Holding Group ("AKHG"), a company based in the Kingdom of Saudi Arabia ("KSA").
AKHG, chaired by Mubarak Al-Khafrah, is a private holding company established in 2008 that invests in KSA and internationally. AKHG has a portfolio of 42 industrial companies employing around 45,000 people, with partners in the oil, gas and petrochemical sectors that include Air Liquide and Gulf Chemicals & Industrial Oils.
The MOA commits the parties to an exclusive relationship to progress and supply MSAR® projects for KSA. In addition, when contract terms are finalised for the first MSAR® installation in a major refinery for commercial supply of fuel to buyers in KSA, QFI and AKHG will form a joint venture company ("JVCo"). This will progress all further business opportunities in KSA with AKHG holding an interest of up to 20%. Prior to the formation of the JVCo, QFI will pay AKHG a commission on sales to KSA clients.
Under the MOA, QFI and AKHG have agreed a plan for advancing their objectives in KSA that consists of 3 phases:
1. Project scoping and delivery of a "Proof of Concept" boiler trial of MSAR® fuel in KSA initially by Quadrise.
2. Commercial contracts by the JVCo for sale of MSAR® equipment, additives, technology licenses and related services to support KSA clients.
3. Technology transfer projects by the JVCo for local production of equipment and/or additives compliant with the In-Kingdom Total Value Add (IKTVA) program to support KSA Vision 2030.
In the event that the project proceeds to phase 3, AKHG may be entitled, subject to approvals and additional investment under new agreements, to additional equity in the JVCo.
The MOA can be terminated, inter alia, by either party:
a. giving 1 months' notice, if a MSAR® Proof of Concept agreement, as referred to under phase 1 above, is not signed within 6 months of the MOA date; or
b. giving 6 months' written notice.
Commenting on this development, Mike Kirk, Executive Chairman of QFI, said:
"We are delighted to have concluded this agreement with Al Khafrah. Their capabilities and established relationships within KSA have an excellent fit with our expertise and technology. We look forward to progressing the MSAR® KSA business with them.
Saudi Arabia is a key market for QFI with significant business potential, especially as KSA seeks to optimise its energy resources and deliver immediate gains underpinning the Vision 2030 initiative.
Under the MOA we see a clear pathway to completing the Proof of Concept project that was originally planned and the wider commercial adoption of MSAR® to reduce energy costs, in conjunction with exciting IKTVA projects to maximise local content to the benefit of KSA's economy."
Emad Al Shamma, Chief Executive Officer of Al Khafrah Holding Group, said:
"We have a systematic and established screening process that looks at the merits of innovative industrialisation, proven technology, sustainable new ideas, maximised local content and fit with Vision 2030 for KSA. Quadrise scored highly in all sectors and we have been extremely impressed with our dialogue with the QFI team, where we have rapidly established shared values, common goals and well defined objectives between us.
We are convinced that MSAR® technology and fuel offers great economic and environmental benefits for KSA at large. The diligent work that Quadrise has carried out to date in KSA provides the platform that, together with the resources of the Al Khafrah Holding Group and our strategic initiatives in various sectors, should enable us to jointly secure commitments for the Proof of Concept trial and future commercial applications expediently to the benefit of Vision 2030 and KSA."
For further information, please refer to the Company's website at www.quadrisefuels.com, or contact [email protected] or phone:
Quadrise Fuels International Plc |
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Mike Kirk, Executive Chairman |
+44 (0)20 7031 7321 |
Jason Miles, Chief Operating Officer |
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Nominated Adviser |
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Cenkos Securities plc |
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Dr Azhic Basirov |
+44 (0)20 7397 8900 |
Ben Jeynes Katy Birkin |
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Joint Brokers |
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Peel Hunt LLP |
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Richard Crichton |
+44 (0)20 7418 8900 |
Ross Allister |
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Shore Capital |
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Andy Crossley Daniel Harris |
+44 (0)20 7601 6108 |
Public & Investor Relations |
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FTI Consulting |
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Ben Brewerton |
+44 (0)20 3727 1000 |
Ntobeko Chidavaenzi |
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Notes to Editors
QFI is the supplier of MSAR® emulsion technology and fuels, a low-cost alternative to heavy fuel oil (one of the world's largest fuel markets, comprising over 450 million tons per annum) in the global power generation, shipping, steam and refining industries.
Vision 2030 is a plan to reduce KSA's dependence on conventional oil, diversify its economy, and develop public service sectors such as health, education, infrastructure, recreation and tourism. Goals include reinforcing economic and investment activities, increasing non-oil industry trade between countries through goods and consumer products, and increasing government spending. The first details were announced on 25 April 2016 by his excellence Crown Prince Mohammad bin Salman.
The In-Kingdom Total Value Add (IKTVA) program in KSA is designed to drive supply-chain efficiency and value across operations, and to encourage the development of a diverse, sustainable, and globally competitive energy sector in the Kingdom. The goal of the program is to increase the amount of goods and services procured in the Kingdom to 70 percent by 2021. As well as driving domestic value creation, IKTVA prioritises consistency and transparency to create a level playing field for more than 1000 suppliers Saudi Aramco are engaged with across local and international networks.
This announcement is inside information for the purposes of Article 7 of EU Regulation 596/2014.
