Legal claim against Logik Developments

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 David Palumbo / Nauman Babar	[phone]
Strand Hanson - Nomad & Financial Adviser James Harris / Richard Johnson	[phone]
Panmure Gordon - Broker John Prior / Hugh Rich	[phone]
Instinctif - Media & investor relations enquiries Guy Scarborough / Tim Field	[e-mail] [phone] / [phone]

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.

 

END