REG - EQTEC PLC - £1.5m Subscription and Loan Transfer

EQTECAnnouncement

10/04/2025 07:00

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RNS Number : 4065E  EQTEC PLC  10 April 2025

 

 

10 April 2025

 

EQTEC plc

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

 

Subscription of £1.5 million by strategic investor

Proposed transfer of existing loan facilities to strategic investor

 

EQTEC plc (AIM: EQT), a leading licensor and innovator of syngas technology
for clean conversion of the world's waste into sustainable energy and
biofuels, to power the circular economy, announces a subscription (the
"Subscription") of 176,470,588 new ordinary shares of €0.01 each in the
capital of the Company ("Ordinary Shares") at a price of 0.85 pence per share
(the "Subscription Price") (the "Subscription Shares") by CompactGTL Limited
("CGTL") via its wholly owned subsidiary Compact WTL Tech Limited ("CWTL").
Further details in relation to the Subscription are set out below.

 

The Company has also agreed to issue 88,235,294 Warrants to CWTL as part of
the Subscription on a 1 for 2 basis with the Subscription Shares (the
"Warrants"). The Warrants may be exercised at a price of 1.5p at any time up
to the fourth anniversary of the date of the Warrant Instrument.

 

The Subscription Shares when fully issued will equate to approximately 28.87%
of the Company's then enlarged issued ordinary share capital and the
Subscription Price represents a premium of 39% on the mid-market closing price
of 0.61 pence per Ordinary Share on 9 April 2025.

 

The collaboration between EQTEC and CompactGTL has evolved beyond a joint
venture vehicle for commercialising integrated waste-to-liquid (WTL)
technology, as was announced on 16 January 2024. The decision to move towards
a direct equity participation by CGTL in EQTEC follows ongoing advanced
discussions with key investors of CGTL who being highly focused on the WTL
business are seeking a structure that captures both the individual and
consolidated value of the intellectual property ("IP") of both companies. As
part of this strategy, CGTL is establishing a significant direct interest in
EQTEC and will form, with the Company, a new joint venture entity in the
United Arab Emirates ("UAE"), which will serve as the dedicated vehicle for
integrated WTL business operations in the MENA region. This approach aligns
with the long-term vision of scaling up commercial deployment and driving
synergies between both companies' technologies.  The aim is to attract local
investors and strategic partners into the UAE entity.

 

The proceeds of the Subscription will be used to continue to develop EQTEC and
CGTL integrated IP for WTL technology, to acquire an interest in a
containerised syngas to liquid fuel pilot plant and contribute to the ongoing
working capital requirements of the Group.

 

David Palumbo, CEO of EQTEC, commented:

"We are delighted to welcome CompactGTL as a strategic investor in EQTEC.
CompactGTL's extensive expertise in gas-to-liquids (GTL) technology and its
proven track record in synthetic fuel production make it an ideal partner as
we advance our commercial deployment of integrated WTL solutions. Their deep
understanding of modular GTL solutions and experience in transforming natural
gas into high-value liquid fuels align perfectly with EQTEC's mission to drive
innovation in waste-to-fuel technologies.

This investment allows us to accelerate the deployment of integrated
waste-to-liquid fuel solutions at scale, reinforcing our position in the
rapidly expanding synthetic fuels market. We look forward to leveraging
CompactGTL's technical expertise, investor relationships, and strategic
insight to maximise value for our shareholders."

 

Anar Asgarov, CEO of CompactGTL, commented:

"CompactGTL is excited to become a strategic investor in EQTEC at a time when
the demand for advanced synthetic fuels is surging and governments globally
are implementing a mix of mandates, incentives and policy frameworks to
accelerate SAF production and adoption. EQTEC's proven syngas technology,
combined with our Fischer-Tropsch gas-to-liquid conversion expertise, presents
a unique opportunity to deliver commercially scalable waste-to-liquid fuel
solutions.

 

Our focus has always been on pioneering GTL technologies to transform gas into
valuable, sustainable fuels. Now, through this investment, we can accelerate
integrating our expertise with EQTEC's advanced gasification technology to
create a highly efficient, modular waste-to-liquid fuel platform. We are
committed to working alongside David and the EQTEC team to commercialise these
innovations and bring game-changing energy solutions to market."

 

Subscription by new strategic investor

 

CompactGTL is a strategic investor and a global leader in small-scale, modular
gas-to-liquid (GTL) technology. With over 18 years of experience in developing
Fischer-Tropsch (FT) catalytic conversion processes, CompactGTL specializes in
transforming synthesis gas into high-value synthetic fuels. The company has
successfully demonstrated its GTL technology at commercial scale, including
projects in Brazil with Petrobras, and has built a strong reputation in the
energy sector for delivering innovative and efficient gas-to-liquids
solutions.

 

In response to the growing demand for low-carbon and circular economy
solutions, CompactGTL has expanded its focus beyond traditional gas processing
to include renewable fuel markets. By leveraging its expertise in modular GTL
technology, the company is actively developing strategic partnerships to
integrate biomass and waste-derived syngas into its liquid fuel production
processes.

 

The proposed investment in EQTEC marks a significant step in CompactGTL's
strategy to enter the waste-to-liquid fuel sector, combining its
Fischer-Tropsch expertise with EQTEC's advanced gasification technology. This
strategic alignment is expected to accelerate commercial deployment and
establish a scalable, commercially viable waste-to-fuel platform for global
markets.

 

 

Following the Subscription and Admission (as defined below), CWTL will be
interested in 28.87% of the enlarged ordinary share capital of the Company.
Pursuant to the Subscription, CWTL has undertaken that neither it nor any
person acting in concert with it (including, without limitation, any connected
parties as defined under the Irish Takeover Rules) will hold, be that through
the Subscription, exercise of Warrants or otherwise, directly or indirectly,
in excess of 29.9% of the voting rights or control in the Company. This
undertaking will remain in force until all of the following occur:

 

(a)  the Irish Takeover Panel agrees to provide a waiver in respect of Rule
9.1 of the Irish Takeover Rules in respect of any mandatory offer obligation
which may be incurred by CWTL or any person acting in concert with it by
reason of an increase in their aggregate percentage shareholding above 29.9%
as a result of the exercise by CWTL of Warrants granted to it, the conversion
of any loan balances referenced below or through purchases on the market;

(b) the approval by the Irish Takeover Panel of a circular to Shareholders of
the Company which complies with the whitewash guidance note of Rule 9 of the
Irish Takeover Rules, as appropriate; and

(c)  the passing of a Whitewash Resolution, on a poll vote, by a majority of
the "independent shareholders" (as that term is used in the Irish Takeover
Rules) of the Company to approve the maximum potential shareholding of CWTL or
any person acting in concert with it.

 

The Company will request a waiver in respect of Rule 9.1 from the Irish
Takeover Panel subject to (b) and (c) above and is currently preparing a
circular for approval by the Irish Takeover Panel to issue to shareholders of
the Company.

 

The Subscription is conditional, inter alia, on the following (the
"Conditions"):

 

(a)  the proceeds of the Subscription having been received by the Company
prior to Admission;

(b) The Company, CWTL and Strand Hanson Limited, the Company's Nominated
Adviser, entering into a Relationship Agreement, in a form customary for a
transaction of this nature which will include the right to nominate two
non-executive directors to the Board of EQTEC. Any such appointments will be
subject, inter alia, to the satisfactory completion of customary due diligence
by the Company's Nominated Adviser;

(c)  Admission of the Subscription Shares becoming effective by 15 April 2025
(or such later time and/or date as the Company may determine, but not later
than 8.00 a.m. on 18 April 2025);

 

Amendment of the Secured Term Loan Facility

 

The Company has also agreed with YA II PN Ltd and Riverfort Global
Opportunities PCC Limited (the "Secured Lenders") to revise the existing loan
terms (as detailed in the Company's announcement of 23 May 2024) as follows:

-     The Maturity Date has been extended from 22 May 2026 to 30 December
2027.

-     The removal of the mandatory prepayment obligations.

A fee of 3% of the outstanding balance on the Secured Term Loan Facility,
which as of 31 March 2025 stands at £5.10 million, will be paid to the
Secured Lenders, no later than 30 June 2025.  To the discretion of the
Company, this fee could be paid in cash or new Ordinary Shares at 0.85p.

 

 

Novation of existing loan agreements and debt

 

The Company has been notified that CWTL has also finalised a commercial
arrangement with the Secured Lenders which will result in the Secured Lenders
transferring the rights and obligations of all Loan Agreements and debt in
respect of the Company to CWTL by way of novation ("Novation"). Completion of
the Novation will occur on the payment of agreed consideration by CWTL to the
Secured Lenders on or before 30 June 2025. As part of the commercial
arrangement all existing warrants issued to the Secured Lenders are to be
cancelled on completion of the Novation and the Secured Lenders have agreed to
a standstill period on any payment obligations and any conversion rights under
all Loan Agreements until 30 June 2025.

 

As part of the Novation process the Company will enter into an updated
debenture and guarantee with CWTL, in the same form as the agreements entered
into with the Secured Lenders.

 

Investment and acquisition of interest in Containerised Syngas to Liquid Fuels
Pilot Plant

 

The Company has agreed with CGTL, following receipt of the Subscription
proceeds,  to invest £250,000 towards the completion of a mobile
Containerised Syngas to Liquid Fuels Pilot Plant, which includes a syngas
upgrading unit and a single-channel Fischer-Tropsch reactor (the "Asset
Purchase"). The unit is designed to be mobile and ready to be transported to
the LERMAB R&D Facility, where it will be used for trials to produce
synthetic crude from syngas generated using EQTEC's advanced gasification
technology.

 

To date, over £3.8 million has been invested by CGTL in the development and
fabrication of the unit. Through this investment, EQTEC will acquire a 10%
interest in the asset, strengthening its position in the development of
sustainable synthetic fuel solutions.

 

 

CWTL Share Transfer

 

On 10 January 2024 the Company's wholly owned subsidiary EQTEC Holdings
Limited ("EHL") acquired 100 ordinary shares of £1 each in the capital of
CWTL. CGTL owned the other 100 shares in CWTL making it and EHL joint 50%
shareholders.

 

On 9 April 2025 to facilitate the Subscription, EHL transferred its 50%
shareholding at its original value back to CGTL such that it is now the sole
owner of CWTL (the "CWTL Share Transfer")

 

Related Party transactions

 

The Subscription, the Asset Purchase and the CWTL Share Transfer are together
the "Transactions". Prior to 8 April 2025, CGTL was a 50% joint venture
partner in CWTL together with the Company.  In addition, Mr David Palumbo, a
director of EQTEC plc, is also a director of CWTL. CGTL and CWTL are therefore
considered related parties as defined in the AIM Rules.

 

Accordingly, the Independent Directors of the Company, being the Directors
other than Mr Palumbo, having consulted with the Company's Nominated Adviser,
Strand Hanson Limited, consider the terms of the Transactions to be fair and
reasonable insofar as the Company's shareholders are concerned.

 

 

Admission and Total Voting Rights

 

Application will be made to the London Stock Exchange for admission of the
176,470,588 Subscription Shares to be admitted to trading on AIM
("Admission"). It is expected that Admission will become effective and that
dealings in the new Ordinary Shares on AIM will commence at 8.00 a.m. on or
around 15 April 2025.

 

The Subscription has been conducted utilising the Company's existing share
authorities. The Subscription Shares will rank pari passu in all respects with
the Company's existing Ordinary Shares.

 

Following Admission, there will be 611,245,373 Ordinary Shares in issue. The
Company holds no Ordinary Shares in Treasury. This number may be used by
shareholders as the denominator for the calculation by which they will
determine if they are required to notify their interest in, or a change in
their interest in, the share capital of the Company under the FCA's Disclosure
Guidance and Transparency Rules.

 

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.

 

ENQUIRIES

 

 EQTEC plc                                      +44 20 3883 7009

 David Palumbo

 Strand Hanson - Nomad & Financial Adviser      +44 20 7409 3494

 James Harris / Richard Johnson

 Shard Capital Partners LLP - Broker            +44 20 7186 9927

 Damon Heath / Isabella Pierre
 Fortified Securities - Broker                  +44 20 3411 7773

 Guy Wheatley

 Global Investment Strategy UK Ltd - Broker     +44 20 7048 9045

 Samantha Esqulant

 

 

About EQTEC

 

EQTEC is one of only a few circular economy technology providers able to
address the dual challenges of growing quantities of global waste and the
growing demand for energy and biofuels. EQTEC cleanly converts waste into a
range of valuable commodities that support new energy and industrial
infrastructure. With one of the world's most experienced thermochemical
conversion technology and engineering teams, EQTEC provides bespoke waste
management and new energy solutions through best-in-class innovation,
infrastructure engineering and value-added services for developers,
owner-operators and industrials.

 

EQTEC's end-to-end process solutions are in demand from around the world with
highly efficient equipment that is modular and scalable from three tonnes of
waste per hour. Its versatile solutions process dozens of varieties of
feedstock, including plastics, mixed municipal waste, industrial waste and
other non-recyclables, all with no hazardous or toxic emissions, producing a
wide range of valuable commodities including synthesis gas ("syngas")
electricity, heat and steam, synthetic natural gas, hydrogen, liquid fuels or
other chemicals.

 

The Company is quoted on the  London Stock Exchange's Alternative Investment
Market (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
(http://www.eqtec.com/) .

 

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