Increased Loan Facilities

RNS Number : 7676R

Alkane Energy PLC

01 July 2015

 

1 July 2015

Alkane Energy plc

("Alkane" or the "Group")

 Increased Loan Facilities

Alkane Energy plc, (AIM: ALK), the independent gas to power producer, is pleased to  announce that it has agreed with its bankers, Lloyds Bank plc ("Lloyds"), some amendments to the existing loan facilities. The amendments, which include an additional advance of £2m, will provide the Group with flexibility in pursuing value enhancing projects and delivering growth.  The enhancements to the facility and Lloyds' continued support reflect the Group's underlying financial strength.  The amendments are as follows:

·      An additional advance of £2m has been made against existing assets under the asset finance loan taken out on 15 July 2014.  The principal on this loan was originally £5.5m with a repayment period of five years ending 8 July 2019.  The repayment profile of the outstanding principal of £4.7m plus the additional advance of £2m has been extended to seven years, with the final payment being due in July 2022.

·      A capital repayment holiday has been agreed in respect of the term loan of £3m taken out on 24 May 2013.   The balance of £1.5m is now repayable on 31 May 2016. 

·      The covenant in respect of quarterly EBITDA levels relative to total net debt will be increased to 2.5 times (from the current 2 times) for the remainder of 2015, and to 2.25 times for the quarter ended 31 March 2016.

The additional funds and the rescheduling of repayments will enable a greater proportion of our cash generation to be used to support the continued development and growth of the Group.

Trading conditions remain consistent with the trading update announcement that was made on 30 April 2015 and expectations are unchanged. 

Neil O'Brien, Chief Executive Officer, commented:

"I am delighted with the continued support of Lloyds.  These amendments will enable the Group to continue to deliver growth during a period when there is a general lack of investment in new power stations and existing capacity is closing.  Alkane is well placed to benefit from the resulting tightening of supply margins in the UK power market."

Notes to Editors

For more information please contact:

Alkane Energy plc Neil O'Brien, Chief Executive Officer Carl Kameen, Finance Director	01623 827927
Liberum Clayton Bush	020 3200 2000
VSA Capital Limited Andrew Raca	020 3005 5000
Hudson Sandler Nick Lyon Alex Brennan	020 7796 4133

Background information

Alkane is one of the UK's fastest growing independent power generators. The Company operates mid-sized "gas to power" electricity plants providing both base load and fast response capacity to the grid. Alkane has a total installed generating capacity of 145MW and an electricity grid capacity of 160MW.

Alkane's base load operations, where power is generated 24/7, are centred on a portfolio of coal mine methane ("CMM") sites.  Alkane has the UK's leading portfolio of CMM licences, enabling the Company to extract gas from abandoned coal mines.

Power response sites are connected to mains gas and produce electricity at times of high electrical demand through peak running, or in order to balance the electricity grid through participation in the National Grid's short term operating reserve programme ("STOR"). Participants in STOR are paid premium rates when called upon by the Grid to meet temporary supply shortages. Alkane now operates 98MW of power response, one of the UK's largest power response businesses, with contracted STOR revenues extending out to 2025.

Alkane has been awarded 101MW of Capacity Mechanism Agreements starting from October 2018, with 55MW existing sites being secured on one year agreements and 46MW new sites on 15 year agreements over the period to September 2033. 

The Group operates from 27 mid-size (up to 25MW) power plants across the UK, 13 CMM only, seven mains gas only, six using both fuel sources and one using kerosene only. Alkane uses a combination of standard modular reciprocating engines and gas turbines to generate the electricity and sells this power through the electricity network. The engine units and other plant are designed to be flexible and transportable allowing additional capacity to be brought onto growing sites and underutilised plant to be moved to new sites to maximise efficiency.

In June 2014 Alkane transferred its shale gas interests to Egdon Resources plc.  It received 40 million Egdon shares making it the largest shareholder in Egdon, the UK's third largest shale operator.

More information is available on our website www.alkane.co.uk

 

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