REG - EQTEC PLC - Legal claim against Logik Developments

EQTECAnnouncement

20/09/2023 16:15

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RNS Number : 1139N  EQTEC PLC  20 September 2023

20 September 2023

 

EQTEC plc

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

 

Legal claim against Logik Developments

and updated revenue forecast

 

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 notifies that, further to the
Company's several announcements pertaining to the Deeside project (the
"Project") between 08 December 2020 and 01 March 2023,  the Company and its
wholly-owned subsidiaries EQTEC UK Services Limited and Deeside WTV
Limited ("Deeside WTV") (collectively, "the Group") have issued a claim
against Logik Developments Limited ("Logik Developments") and its wholly-owned
subsidiary Logik WTE Limited ("Logik WTE") (collectively, "Logik") in the
London Circuit Commercial Court of the Business and Property Courts of England
and Wales (the "Court") (the "Claim"). The Claim has been made in connection
with payments made by the Group and due to the Group in relation to the
Project, and for breach of the share purchase agreement between Logik
Developments and Deeside WTV, originally executed on 07 December 2020 and
amended several times since that date (the "SPA").

 

Claim against Logik

 

Specifically, the payments that the Claim relates to are:

 

(1)  payments made by the Group to Logik, or payments made or costs incurred
by the Group on behalf of Logik in relation to the satisfaction of certain
conditions precedent under the SPA, or otherwise in relation to the
development of the Project; and

 

(2)  payments made by Deeside WTV to Logik under the terms of the SPA.

 

The total amounts claimed by the Group total c. £4 million.

 

The Company has, since January 2023, made numerous attempts to engage Logik in
constructive discussions toward resolution of these matters, more recently
extending several invitations through the Company's legal counsel to seek to
make clear the seriousness of its contentions and to formally invite Logik to
work them through constructively. In response to every invitation, Logik
either rejected the offer or failed to follow through on its agreements to
meet with the Group.

 

As part of its considerable work in advancing the Project, the Company has
introduced to Logik a number of prospective investors and buyers of Logik WTE,
including a buyer that withdrew its interest in November 2022 and more
recently, a buyer with the financial backing of a large, institutional
investor. EQTEC understands that this latter buyer has signed a binding term
sheet with Logik to acquire the Project site. The Company has been informed
multiple times by numerous Project stakeholders that Logik has directly
engaged with them without the involvement of the Company and without the
approval of the stakeholders.

 

Updated 2023 revenue forecast

 

Due to the matters set out above, the Company will no longer benefit from the
meaningful revenue which was expected to be received from the Project in the
current financial year.

 

In addition, French client Idex's France MDC project has rescheduled the
completion of front-end engineering design work to December 2023, such that
orders will not be placed for equipment until early 2024 and delaying
anticipated revenues from this project. Furthermore, client projects in
Belišće (Croatia), Livadia (Greece) and Wilseyville (California, USA) are
experiencing delays with securing full funding, thus delaying revenues
previously expected in Q4 2023 into 2024, subject to securing such funding.

 

As a result of these events,  and in light of the Company's publicly
announced rationalisation of other, legacy projects with unmitigated risks and
liabilities, the Company has updated its overall FY 2023 revenue forecast to
€2 - 3 million.

 

The reduction in forecast revenue comes as the Company moves away from
high-risk development work with unconfirmed funding and unqualified partners,
toward well-qualified, pre-funded work owned by top-tier developers or
owner-operators. This shift is viewed by the Board as essential to refocusing
the Company on its core capabilities of advanced process engineering and core
technology delivery, moving faster to deliver its technologies into a growing
number of higher-probability projects.

 

The Company will further outline its commitment to execution of and progress
with its strategic shift in its 2023 interim results, due for publication by
the end of September 2023.

 

David Palumbo, CEO of EQTEC, commented:

 

"We have consistently reiterated our dedication to the Deeside Project and to
Toyota, whose strategic ambitions for carbon-neutrality have required timely
progress by us and our partners. It has been frustrating to have to direct our
energies this year toward resolution of issues with Logik, rather than toward
further progressing the Project.  It is also disappointing to find ourselves
in a position where we are forced to take legal action against one of our
partners for attempting to go it alone whilst ignoring our common commitments
to the Project. The Company has consistently supported the Project and our
partners by amending agreements to adapt to evolving commercial realities, and
we have made investment after investment to keep the Project moving forward.
This was in the interest of developing the site for Toyota and for Flintshire
with the goal of demonstrating EQTEC's advanced syngas technology for an
industrial client. Logik's unwillingness since the start of the year to engage
in discussions with us has jeopardised the Project and leaves us with no
choice now but to protect the Company from bearing the cost of Logik's
actions."

 

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 / Nauman Babar

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

 James Harris / Richard Johnson

 Panmure Gordon - Broker                                +44 20 7886 2500

 John Prior / Hugh Rich

 Instinctif - Media & investor relations enquiries      EQTEC@instinctif.com (mailto:EQTEC@instinctif.com)

 Guy Scarborough / Tim Field                            +44 791 717 8920 / +44 788 788 4794

 

About the Deeside project

 

The Deeside project (the "Project") comprises 6.27 hectares of land off
Weighbridge Road on Deeside Industrial Estate and adjacent to the Toyota
Deeside Engine Plant, in Flintshire, north Wales, UK, on a site that was
formerly a Gaz de France power station.

 

The prospective, multi-technology plant would include a material recovery
facility ("MRF") and anaerobic digestion ("AD") facility that would deploy
technologies from Anaergia, Inc. ("Anaergia"), with an advanced thermal
conversion ("ATC") facility that would deploy EQTEC's syngas technology.

 

The MRF would process 182,000 tonnes per year of municipal solid waste
("MSW"), separating recyclables and sending them off site for processing,
separating biogenic materials for processing at the AD facility and producing
refused-derived fuel ("RDF") from the remaining materials, including plastics,
for processing by the EQTEC ATC facility. The 2.0 MW AD facility would produce
5.5 million NM3 per year of biomethane, with 17,000 MWh of the gas (c. 29%)
exported to Toyota and the remainder exported to the national grid. The 9.9 MW
ATC facility would receive 77,000 tonnes per year of RDF from the MRF and
produce 77 - 87,000 MWh of electricity per year, of which 27,000 MWh (c. 35%)
would be exported to Toyota, with the remainder exported to the national grid.
There is additional potential to apply the ATC facility to production of
hydrogen, for which initial feasibility work has been undertaken.

 

About EQTEC plc

 

As one of the world's most experienced thermochemical conversion technology
and engineering companies, EQTEC delivers waste management and new energy
solutions through best-in-class innovation and infrastructure engineering and
value-added services to owner-operators. EQTEC is one of only a few technology
providers directly addressing the challenge of replacing fossil fuels for
reliable, baseload energy. 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, specifies and delivers clean, syngas production solutions in
the USA, EU and UK, with highly efficient equipment that is modular and
scalable from 1MW to 30MW. EQTEC's versatile solutions process 60 varieties of
feedstock, including forestry waste, agricultural waste, industrial waste 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 renewable 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 the London Stock Exchange's AIM Market (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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