EQT Eqtec Plc

13 February 2024

EQTEC plc

("EQTEC", the "Company" or the "Group")

Subscription of £0.5 million by new strategic investor

Conversion of debt into equity by significant shareholders

Expected sale of remaining shares held by YA-RF Lenders

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, is pleased to announce that it has successfully raised gross proceeds of £0.5 million by means of  a direct subscription (the "Subscription") of 21,276,596 new ordinary €0.01 shares ("Ordinary Shares") at a price of 2.35 pence per share  (the "Subscription Price") (the "Subscription Shares") by Verde Corporation ("Verde").

The Subscription Shares equate to approximately 11.72% of the Company's current issued ordinary share capital and the Subscription Price represents the mid-market closing price of 2.35 pence per Ordinary Share on 9 February 2024.

The proceeds of the Subscription will be used to contribute to the ongoing working capital requirements of the Group.

In connection with the subscription by Verde, Altair Group Investment Limited ("Altair") and Pitcole Limited ("Pitcole"), both significant existing shareholders in the Company, have agreed with the Company to convert, conditional upon Admission, their respective outstanding loan balances under the £3.0 million syndicated loan facility (the "Facility") announced on 20 November 2023 ("the Shareholder Conversions").

The Company has also introduced a UK Special Situations investor  to YA II PN Ltd and Riverfort Global Opportunities PCC Limited (the "YA-RF Lenders"), to purchase the remaining balance of 10,162,349 Ordinary Shares currently held by held by the YA-RF Lenders, issued to them pursuant to the debt restructuring transaction announced by the Company on 20 November 2023.

Subscription by new strategic investor

Verde is a newly formed entity which is part of the US based Verde group of companies ("Verde Group"), a diversified group of businesses focused on opportunities with a sustainability and technology focus. Following the Subscription, Verde will be interested in 9.67% of the enlarged ordinary share capital of the Company following Admission (as defined below).

Completion of the Subscription is conditional, inter alia, on the proceeds of the Subscription having been received by the Company prior to 19 February 2024 and admission of the Subscription Shares to trading on AIM ("Admission") by 22 February 2024 (or such later time as the Company may determine, being not later than 26 February 2024).

Pursuant to the Subscription agreement, Verde has also committed to make a second subscription for new Ordinary Shares of £1 million (the "Second Subscription") at 4.75 pence per share, over 100% premium to the current share price, and would receive an equal number of warrants to the Second Subscription shares at a strike price of 4.75p and with a duration of 48-months. The Second Subscription is conditional, inter alia, on completion to Verde's satisfaction of an ongoing due diligence exercise on the Company and shareholder approval to be sought at an Extraordinary General Meeting for the issue and allotment of any shares to be issued pursuant to the Second Subscription, such General Meeting to be convened as and when Verde confirm satisfactory completion of their due diligence exercise.  Under the agreement, admission of the shares to be issued pursuant to the Second Subscription, if completed, must be by no later than 28 March 2024. Verde has committed not to trade any Subscription Shares until after either they have completed the Second Subscription or notified the Company in writing of their non-participation in the Second Subscription, and the Company has issued an announcement to that effect. If at any time, Verde is interested in 10% of more of the Company's issued shares, they will have the right to appoint a representative Director to the Board of the Company.

The Verde Group currently has holdings in companies within the sectors of new energy and biofuels, including infrastructure, industrial technology and storage. Verde Group's strategy is to acquire equity positions and work closely with the management, in businesses with strong synergies to leverage and exploit commercial and operational synergies between the various holdings of the Verde Group.

Conversion of debt into equity by significant shareholders

In connection with the subscription by Verde, Altair Group Investment Limited ("Altair") and Pitcole Limited ("Pitcole"), both significant existing shareholders in the Company, have agreed with the Company to convert, conditional upon Admission (as defined below), their respective outstanding loan balances under the £3.0 million syndicated loan facility (the "Facility") announced on 20 November 2023 ("the Shareholder Conversions").  Altair's balance under the Facility is £174,000 ("Altair Conversion") and Pitcole's is £232,000 ("Pitcole Conversion"), both balances including principal and interest.  A total amount of £406,000 is being converted into 17,276,596 new Ordinary Shares in the Company (the "Conversion Shares") at the Subscription Price.  Following the Shareholder Conversions, the outstanding principal balance remaining under the Facility is £600,000, held solely by the YA-RF Lenders. Altair and Pitcole have signed lock-in agreements with the Company, under which they have undertaken not to trade the Conversion Shares until after 30 June 2024. The issue of the Conversion Shares is conditional on completion of the Subscription.

Expected sale of remaining shares held by YA-RF Lenders

The Company has also introduced to the YF-RF Lenders a UK Special Situations investor, Catalyse Capital Limited ("Catalyse"), to purchase the 10,162,349 Ordinary Shares currently held the YA-RF Lenders, comprising the balance of the Ordinary Shares issued to the YA-RF Lenders pursuant to the debt restructuring transaction announced by the Company on 20 November 2023.  As a result, the Company has been informed that Catalyse and the YA-RF Lenders will shortly enter into a share purchase agreement and expect to execute the transaction imminently.  Following this trade, the YA-RF Lenders would no longer hold any Ordinary Shares in the Company but retain 26.4 million warrants to subscribe for ordinary shares as detailed in the Company's announcement of 29 November 2023. The strike price for these warrants is 7.87 pence, a premium of 286% to the Subscription Price.  The YA-RF Lenders have undertaken to the Company, for a cash fee of £50,000, not to convert the remaining £600,000 syndicated facility, until after 30 June 2024.

Related party transaction

Altair has an existing holding of 41,535,382 Ordinary Shares in the Company representing 22.89% of the Company's issued share capital and Pitcole has an existing holding of 23,502,160 Ordinary Shares in the Company representing 12.95% of the Company's issued share capital, and as such they are each substantial shareholders as defined in the AIM Rules for Companies (the "AIM Rules"). As a result, the Shareholder Conversions are related party transactions pursuant to Rule 13 of the AIM Rules. Accordingly, the Directors of the Company, having consulted with the Company's Nominated Adviser, Strand Hanson Limited, consider the terms of Shareholder Conversions to be fair and reasonable insofar as the Company's shareholders are concerned.

Admission and Total Voting Rights

The Subscription and the Shareholder Conversions have been conducted utilising the Company's existing share authorities. The Subscription Shares and the Conversion Shares will rank pari passu in all respects with the Company's existing Ordinary Shares.

Application will be made to the London Stock Exchange for admission of the new Ordinary Shares being issued pursuant to the Subscription and the Shareholder Conversions, being in aggregate 38,553,191 new Ordinary Shares  and it is expected that Admission will become effective and that dealings in the New Shares on AIM will commence at 8.00 a.m. on or around 22 February 2024.

Following Admission, there will be 220,039,081 Ordinary Shares in issue. The Company holds no Ordinary Shares in Treasury. This number may be used by shareholders as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules.

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 

About EQTEC

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 Alternative Investment Market (AIM) (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.