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REACT adjusts finances for Enfield biomass project

Published: 07:49 24 Jun 2014 BST

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REACT Energy (LON:REAC) is to adjust the structure of the finance package for its Enfield biomass project, with it now seeking an upfront payment and a minority stake.

Discussions have been underway since March with a number of co-investors over due diligence and a project finance term sheet.

REACT said this has delayed the financial close, but was necessary to secure the maximum financing and returns from the project.

The new terms will see investors provide 100% of the funding required for the construction and operation, with REACT not required to invest any further funds.

Elsewhere, at Newry, REACT added talks have started with new technology providers over the roll-out of phase two of the Northern Ireland biomass project.

A decision is expected to be made by NBL, the joint venture company between REACT and Farmers, in the coming weeks.

REACT said the slow progess at Newry had been challenging and frustrating but it remained committed to completing the roll-out of the full four megawatt (mw) capacity at the site.

Elsewhere, construction of the Old Buckenham Hall School biomass energy system has begun. It will be its third biomass heat project, with commissioning expected within three months.

Planning approval has also been received for a 500 kilowatt (kw) Tullagubbeen single wind turbine project in County Kerry, making eight wind farm sites in its portfolio with planning permission.

On the financial front, REACT has re-financed a £1.5mln loan note while Enterprise Ireland has agreed to convert €500,000 worth of preference shares into ordinary equity at a price of 38p.

Gerry Madden, REACT’s chief executive, said: “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 the Enfield project and the review of the technology provider at the Newry project are key to ensuring we are able to maximise potential return from these projects for shareholders.

“With the Old Buckenham Hall School project, the third of the biomass heat generation plants to be put into operation, progressing well and exciting developments at our wind farm and single turbine projects, the SLN [loan note] will allow us to further accelerate the growth of REACT.”

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