23rd Jul 2009 12:30
23 July, 2009
PRESS RELEASE
IPSA Group PLC
("IPSA" or "the Company")
FINANCIAL AND TRADING UPDATE
Following the announcement of the interim results for the six months ended 31 March 2009 on 25 June 2009, the Company is providing an update.
1. Short term financing and related party transaction
The Company informed shareholders on 31 March 2009 that Independent Power Corporation PLC ("IPC"), a company controlled by Peter Earl (chief executive of both IPSA and IPC), was provisionally prepared to make further loans to the Company for working capital purposes. IPSA confirms that on 22 July 2009 it received an advance of $250,000 (£152,068) from IPC. This loan is payable on demand and is on the same commercial terms as previous loans made by IPC to IPSA.
Following the advance of $250,000, the balance due to IPC is £0.78 million. Under the AIM Rules, the aggregated loan from IPC is classified as a related party transaction. The Independent Directors, being Stephen Hargrave and Neil Bryson, consider, having consulted with Noble & Company Limited (the Company's nominated adviser), that the terms of the aggregated loan from IPC are fair and reasonable insofar as IPSA's shareholders are concerned.
In addition, IPC has indicated it may be prepared to make up to an additional $750,000 (£456,204) available, subject to certain conditions. A further announcement will be made to shareholders in the event that additional financing is provided by IPC.
2. Siemens Westinghouse 501 DU turbines
IPC has expressed an interest in purchasing one or more of the Company's four Siemens Westinghouse 501 DU gas turbines (formerly referred to as the Fiat Avio 501 D turbines, but now upgraded), for deployment in future combined cycle projects in the Middle East and in Asia. IPC is currently developing appropriate projects for the turbines.
IPSA originally acquired the 501s for the proposed Coega Fast Track project at Port Elizabeth but delays to the procurement process for that project have persuaded the Board to seek to sell the turbines (which are currently in store in Italy and are available for immediate delivery) especially in view of the Company's need to make interest payments and capital repayment totalling £15.7 million to Standard Bank by the end of September 2009, which financed the original purchase of the turbines. On the basis of market intelligence, the directors anticipate that the sale of the four turbines would generate funds substantially in excess of the amount required to repay the Standard Bank loan and other outstandings. However it must be emphasised that any such sale is dependent, inter alia, on appropriate financing being available for the project(s) in which the turbine(s) may be deployed. It is intended that in the event of IPC completing the purchase of one or more of the turbines that the working capital loans referred to in the first paragraph above will be offset against the purchase price. €12.4m (£10.7m) is owing to the manufacturer which has refurbished the 501s and this amount is not payable until the machines are sold.
3. Newcastle combined heat and power plant
IPSA has recently learned that power purchase contracts under Eskom's Medium Term Power Purchasing Programme ("MTPPP") previously advertised for immediate implementation by Eskom, will not now be awarded until April 2010 at the earliest. The Company had tendered power to the MTPPP at the lowest price sought by Eskom and had been required under the terms of the tender not to reach agreement to supply any other customer (e.g., independent industrial purchasers) during the tender period. It is therefore a great disappointment to the board of IPSA that a further delay is now proposed.
As a result, the Company's Newcogen subsidiary is now in negotiations aimed at restarting production of steam at its plant in Newcastle, KwaZulu Natal in order to supply customers on-site. Newcogen will be making every effort to function at operating break-even until such time as Eskom implements the MTPPP.
IPSA is also seeking to move ahead with its clean coal projects in the Eastern Cape using coal from the Elitheni mine on the basis of private sector power contracts. As power conservation measures come into effect in South Africa at the end of this year, a number of larger power users may be facing significant increases in their electricity costs. IPSA intends to target these power users for private power purchase agreements.
For further information contact:
|
Peter Earl, CEO, IPSA Group PLC: |
+44 (0)20 7793 5615 |
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Elizabeth Shaw, COO, IPSA Group PLC: |
+44 (0)20 7793 5615 |
|
John Llewellyn-Lloyd / Sunil Sanikop, Noble & Company Ltd: |
+44 (0)20 7763 2200 |
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Dino Theodorou, PSG Capital (Pty.) Limited |
+27 11 797 8400 |
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Jacques de Bie, College Hill (South African PR Advisers) |
+27 11 447 3030 |
or visit IPSA's website:
www.ipsagroup.co.uk
About IPSA:
IPSA Group PLC is a British company established to develop power generation projects in southern Africa. It is managed by a team with a strong track record in developing power projects worldwide and with considerable experience in Southern Africa.
IPSA floated on the AIM market of the London Stock Exchange in September 2005 and obtained a dual listing on the Altx market of the Johannesburg Stock Exchange in October 2006.
Related Shares:
IPSA.L