New banking facility

RNS Number : 5242O

Alkane Energy PLC

20 September 2011

 



20 September 2011

Alkane Energy plc

("Alkane" or "the Company")

New banking facility

Alkane Energy plc announces it has reached agreement with its current lending bank Lloyds TSB Bank PLC for an increase of £2m to its current £5.5m bank facility, with the new £7.5m facility maturing in July 2013. The interest charge is 2.5% above LIBOR and covenants are in place in respect of growth of net worth, EBITDA levels relative to outstanding debt, interest cover, minimum electricity pricing levels and the proportion of output under contract.

Alkane continues to work well within the current bank facility and covenants. The Company's operating sites are highly cash generative, with EBITDA margins of circa 50%.  This organic cash flow combined with the increased facility will provide Alkane with the ability to take the Company through its coal mine methane roll-out programme and allow advantage to be taken of further growth opportunities.

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For more information please contact:

Alkane Energy plc Steve Goalby, Finance Director	01623 827927
Altium Capital Limited Adrian Reed, Financial Advisory Chloe Ponsonby, Corporate Broking	0845 505 4343 020 7484 4040
Hudson Sandler Nick Lyon Alex Brennan	020 7796 4133
www.alkane.co.uk

Notes to Editors:

Alkane is a profitable, cash generative and growing 'clean tech' business operating from 12 power plants around the UK with a capacity of over 40MW and with a growing presence in renewable biogas and power response.

The Company has the UK's leading portfolio of coal mine methane ("CMM") licences, enabling it to extract gas from abandoned coal mines.  Alkane started extracting CMM in 1999 with sites at Shirebrook, Steetley and Markham.  Shirebrook and Markham are still operational today, a decade after they were opened.  Shirebrook is still producing CMM and surplus generating capacity has been deployed to power response along with capacity at Markham.  

The Group now generates power from 13 mid size (up to 10MW) plants across the UK and sells this power through the electricity distribution network.  The electricity is generated using standard modular reciprocating engines, and these units and other ancillary plant are designed to be flexible and transportable.  This allows additional capacity to be brought onto growing sites and underutilised plant to be moved to new sites to maximise efficiency. 

The Alkane operating model has already been transferred to power response, and currently operates 8MW across two sites on conventional gas with our trading partner (GDF SUEZ Energy UK). Power response incorporates peak running (normally 16.00 to 19.00 each weekday) and Short Term Operating Reserve ("STOR") under which National Grid contract standby facilities with generators.

The Biogas market also provides a potential new business stream which will require the same power assets and core gas and electricity skills as CMM.  Alkane has a collaboration agreement with the TEG Group PLC ("TEG") to build and operate anaerobic digestion ("AD") facilities using municipal waste.

Alkane's onshore licence position, which extends to over 600km², includes coal bed methane ("CBM") and shale gas potential.  These are longer term opportunities, with a different risk profile, and therefore the Company is seeking a partner who can bring CBM experience and financing through the exploration stage. 

 

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