6th Nov 2019 17:28
(Alliance News) - EQTEC PLC said Wednesday the acquisition of a 20% stake in North Fork Community Power LLC has been delayed due to California forest fires delaying the completion of due diligence over funding.
EQTEC will acquire the 20% interest in NFCP once a two megawatts biomass plant in North Fork, California, is completed.
In late July, NFCP was granted approval by the sate to issue tax-exempt bonds totalling USD9.3 million and non-tax-exempt bonds totalling USD5.5 million. The proceeds from the bonds, as well as EQTEC's USD2.5 million investment is expected to allow the project reach financial close.
Due diligence has been conducted by subscribers for the bonds and the finalisation of legal documentation, which has been going on for several weeks.
EQTEC initially expected the process for the issue of bonds would be completed by the end of October, however forest fires in California have continued to cause disruption, meaning it has taken longer than expected to complete the process.
In order to accelerate the financial close, Phoenix Biomass Energy Inc and EQTEC have agreed to make a path towards financial close which does not require the sale of tax credits.
The legal documentation to finalise the bond subscription is still being reviewed by the relevant parties, with financial close for the project expected before the end of 2019.
"It has been a busy number of months with numerous work streams being progressed, with particular focus on introducing project funding options to our partner, Phoenix Energy. We are encouraged by the strong local support for the project and the growing realisation that the project will have such an important positive environmental impact, improving California's current critical situation with forestry wood waste. We are confident that this would be the first of many more projects in California with Phoenix Energy," said Chief Executive Officer David Palumbo.
Shares in EQTEC - which is headquartered in Cork, Ireland - closed 8.3% lower at 0.11 pence in London.
By Dayo Laniyan; [email protected]
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