Placing, Operational Update & Total Voting Rights

RNS Number : 8876N

Quadrise Fuels International PLC

04 October 2012

 



4 October 2012

Quadrise Fuels International PLC

("QFI", "Quadrise" or the "Company")

Placing for Cash

Operational Update

Total Voting Rights

Quadrise Fuels International PLC, the emerging supplier of MSAR®, a low cost alternative to heavy fuel oil in the shipping, refining, and power generation markets, confirms that it has placed 50,000,000 new ordinary shares of 1p each ("Ordinary Shares") in the Company ("Placing Shares") at a price of 7p per share (the "Placing Price"), raising  £3.5 million (before expenses) (the "Placing"). 

Application has been made for the 50,000,000 Placing Shares to be admitted to trading on AIM and dealings are expected to commence on 9 October 2012.

The board of directors of Quadrise (the "Board") believes that the proceeds of the Placing will be sufficient to allow the Company to develop its current projects to the stage when they can generate net positive cash flow from continuing operations as well as strengthen the Company's balance sheet in order to meet any additional capital expenditure and general working capital requirements of the Quadrise group.

The Placing was undertaken by the Company's broker, Westhouse Securities Limited, and First Columbus Investments LLP.

Commenting Ian Williams, Chairman of Quadrise, said:

"The past 12 months have seen a step-change towards the commercialisation phase for Quadrise and our close partners. In particular, the two year MSAR® Marine fuel development and assessment programme with Mærsk has moved forward to pre-commercial testing and certification. In Saudi Arabia, Saudi Aramco has formally approved the application of our Quadrise MSAR® technology in their refineries and the execution of an MOA with M/S Rafid Group has settled the basis and terms for our future presence in the country. Quadrise is now well placed to move forward in both of these core business lines, each of which has the potential to have substantial impact on the future performance of the Company.

Given the uncertainty in today's markets we are delighted that investors have clearly recognised the progress made by the Company, demonstrated by the Placing being over-subscribed. A very warm welcome is extended to our new shareholders.

We are making excellent steps towards full commercialisation and look forward to updating our shareholders and the wider markets in the months to come."

Operational update

The Company (through its subsidiaries, together the "Group") has directly managed interests in various projects which continue to be the principal focus of management as realisation of the associated business plans represent the prime opportunities to add shareholder value in the medium term. The directly controlled interests of QFI are managed by Quadrise International Limited ("QIL").  The principal programmes currently being undertaken have reached varying stages of development, as detailed below.

Marine MSAR®

QIL, A.P.Møller-Mærsk ("Mærsk") and AkzoNobel Surface Chemistry AB ("AkzoNobel") continue to work jointly in a coordinated effort aimed at the production, supply and marketing of MSAR® marine fuel as an approved low cost and environmentally superior replacement for bunker fuel oil. This is a global market of over 170 million tonnes per annum and securing even a modest share will provide substantial underpinning of the future value of QFI.

As previously announced, the first 'in service' vessel trial took place over year end 2011 and into the first quarter 2012 and identified opportunities to improve further both the performance of the fuel and the economics of the formulations.  Scientists and engineers from QIL and AkzoNobel have successfully developed an enhanced version of the fuel, with an agreement to proceed with the fuel manufacturing and assessment programme, which includes the further evaluation of the new formulations on the pathway to commercialisation.

These developments have resulted in an extension of the pre-commercial phase by approximately six months, to cover the associated programme of further trials. The plan for 2013 naturally remains subject to the outcome of engine testing, third party approvals and the conclusion of commercial agreements with stakeholders. The Company anticipates that commercial volumes of Marine MSAR® will be produced progressively from mid-2013 to allow the wider evaluation of performance across a representative range of vessels prior to full commercial roll-out during 2014.

Saudi Arabia

On 22 August 2012, the Company announced the signing of a Memorandum of Agreement ("MOA") between QIL, Quadrise KSA and M/S Rafid Group for Trading & Contracting to formalise their relationship in anticipation of contractual commitments for the application of Quadrise MSAR® technology and fuel in the Kingdom of Saudi Arabia ("KSA").

The fully detailed definition of the Saudi Aramco project planning and execution process will ultimately determine the MSAR® implementation timetable. The scope is expected to encompass the first major refinery project, followed by a larger scale programme to process the bulk of the available heavy residue within KSA to MSAR®.  Agreements covering the demonstration plant installation and subsequent progression to full commercial operation are anticipated over the next 12-15 months.

Americas

There is an opportunity with Petroleos Mexicanos ("PEMEX"), the state-owned oil company of the Republic of Mexico, the scope and merits of which are very similar to those in KSA, especially with respect to the quantities of fuel oil consumed in domestic power generation, the high level of diesel fuel imports and rising domestic demand for all distillate fuels in Mexico.

Extensive preparatory work has been done with PEMEX over several years and QIL expects to execute contracts with PEMEX before the end of 2012 on the terms formulated in this process, but the Company has allowed for a later signature date in its business planning.

Shareholders have been advised that the Company assumed responsibility for the development of all business activities in Central and South America by agreement with Quadrise Canada Corporation. Updates have also been provided recently on the Canadian companies in which QFI has equity investments. The Company also recently announced the execution of an agreement with Nexidea Inc, a Dallas based specialist consultancy company providing advisory services to oil refiners and power generators in the Central and South America region. An early result of this association will be the addition of a number of early stage prospects to the QIL portfolio for which QIL has already concluded non-disclosure agreements and the Company will update the market accordingly.

Asia

The agreement with YTL PowerSeraya Limited in Singapore to identify and develop a MSAR® fuels supply chain for their power plant in Jurong has been extended. The associated joint programme, to identify, evaluate and select a suitable manufacturing base and supply system has involved discussions and refinery optimisation studies with several oil majors. 

Prospects for the managed interests

While a variety of factors have resulted in the Company's revenue expectations moving out by approximately 12 months, the principal managed programmes have been advanced over the past year.  Every effort has been made to reduce the cash burn rate and the Placing will be instrumental in driving the business plan through to commercial revenue. The near term Central and South American prospects will also require funding but in these cases provision has been made in the relevant agreements for the introduction of financing partners at the project/venture level. 

Non-managed interests

The Company holds minority interests in several Canadian associate companies. Quadrise Canada Corporation ("QCC") was originally formed to develop the MSAR® fuels business in the Alberta oil fields. With this specialised application of fuelling steam generation it developed an in-house R&D capability which created a store of knowhow and a suite of associated patents. The collapse of the natural gas price has unfortunately eliminated the core business opportunity, however QCC has spawned several new ventures aimed at exploitation of the emulsions expertise in energy related niche applications. QFI holds equity interests in the ventures formed to date and automatic participation in those yet to be formed.

The most advanced of the venture companies is Optimal Resources Inc ("Optimal"), which owns the Enhanced Oil Recovery technology developed by QCC and has tested this technology with some success in an Optimal owned depleted oil field in Lloydminster, Saskatchewan, Canada. 

QFI holds 20.4% of QCC and 9.5% of Optimal.

Total Voting Rights

Following the admission to trading on AIM of the 50,000,000 Placing Shares on 9 October 2012, the Company's capital will consist of 772,543,391 Ordinary Shares.

The total number of voting rights in the Company will be 772,543,391.  The voting rights on all these shares are identical.   This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the FSA's Disclosure and Transparency Rules following 9 October 2012.

-ENDS-

For further information, please refer to the Company's website at www.quadrisefuels.com or contact:

Ian Williams, Executive Chairman Hemant Thanawala, Finance Director Quadrise Fuels International Plc	[phone]
Dr Azhic Basirov / Siobhan Sergeant Nominated Adviser Smith & Williamson Corporate Finance Limited	[phone]
Antonio Bossi / Petre Norton / Ian Napier Broker Westhouse Securities Limited	+ 44 (0)20 7601 6100
Chris Crawford / Kelly Gardiner / Sean Perry Joint Bookrunner First Columbus LLP	+ 44 (0)20 3002 2070
Philip Dennis / Nick Lambert / Rollo Crichton-Stuart Public & Investor Relations Pelham Bell Pottinger	[phone]

 

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