React Energy provides update on bioenergy projects
React Energy, an infrastructure developer and operator which focuses on the production of clean energy in the UK, has released an operational update, in which it announced the issuance of a £1.5 million (€1.9 million) secured loan note (SLN).
The SLN is intended to fund the ongoing development of the group through organic and acquisitive growth.
React is currently developing a number of projects, including the Newry and Enfield biomass projects.
The Board of Newry Biomass (NBL), a joint venture between React and its largest shareholder Farmers Business Developments, has been evaluating the rollout of phase two of the Newry plant. This comes after the Ulster Bank approved the financing for a second phase at the end of January this year. The operation of phase one is reliant on the completion of upgrades to the local electricity grid infrastructure, which are part of phase two of the project.
React says that discussions with the current technology provider have been ongoing for a number of months and have been both 'timing consuming and challenging'. For that reason the company believes it could be difficult to reach agreement of commercial terms with the current technology provider for the rollout of phase two.
With this in mind, React has begun discussions with a number of alternative technology providers and these are ongoing. It is expected that an engineer procure and construct (EPC) contract will be signed with a new technology provider. On this basis the role of Kedco Fabrication, as the current EPC provider, will be re-evaluated. NBL is expected to make a decision on this in the 'coming weeks'.
With regards to the Enfield project, React has recently signed heads of terms with the Foresight Group for the part financing of the Enfield biomass plant. Under this heads of terms, a number of co-investors were required to finance the project alongside Foresight.
Since March, React says it has sought to change the structure of the transition, which is now expected to see it receiving a cash development fee on financial close as well as retaining a minority shareholding in Enfield. It is envisaged that the investors will provide 100% of the funding required for the construction and operation and on that basis React will not be required to invest any further funds.
React CEO Gerry Madden says: 'We have been working hard across the group's portfolio to progress our project as quickly as possible. We have encountered some time consuming hurdles which have delayed progress, particularly at our Enfield and Newry biomass projects. However, the due diligence and term sheet negotiation with regards to Enfield, and the review of the technology provider at Newry, are key to ensuring we are able to maximise potential return from these project and shareholders.'
