ALK Alkemy Capital Investments Plc

 

TIDMALK 
 
RNS Number : 0856O 
Alkane Energy PLC 
02 March 2009 
 

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| For immediate release               |                               2 March 2009 | 
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Alkane Energy plc 
 
 
("Alkane" or "the Company") 
 
 
Agreed sale of interest in Pro 2 
 
 
Alkane agrees to sell its equity interest in Pro2 for a consideration of EUR3.6 
million and receives early repayment of EUR1.96 million shareholder loan 
 
 
Cash will be invested in the growth of Alkane's UK gas to power generation 
business 
 
 
Alkane Energy plc (AIM: ALK) the profitable energy company that operates 
environmentally friendly power generation plants using coal mine methane ("CMM") 
today announces an agreement for the sale of its 38% equity interest in Pro2 
Anlagentechnik GmbH ("Pro2") and provides a trading update ahead of its 
preliminary results for the year ended 31 December 2008 due to be announced on 
18 March 2009. 
 
 
Deutsche KWK GmbH ("Deutsche KWK"), a German cogeneration and biogas to power 
company, has agreed to acquire Alkane's shares in Pro2 for a cash consideration 
of EUR3.6 million. In addition, terms have been agreed for the early repayment of 
a long-term shareholder loan which was due for repayment in 2013.  Accordingly, 
EUR1.0 million will be repaid now and the remaining EUR0.96 million in instalments 
of EUR460,000 on 31 December 2009 and EUR500,000 on 31 December 2010.  Alkane will 
place EUR720,000 from the consideration into an escrow account to act as 
collateral against any warranties or other claims. Subject to no claims, the sum 
in escrow will be released to Alkane in 2010.  Following the exchange of 
agreements for the sale of Pro2, completion of the transaction is anticipated 
within two weeks. 
 
 
Pro2 manufactures, services and operates equipment for the processing and 
utilisation of methane.  Alkane's share of Pro2's profits in the year ended 31 
December 2007 (the last year for which audited accounts are available) was 
GBP299,000 and Pro2 paid interest of GBP172,000 to Alkane in the year ended 31 
December 2007.  At 31 December 2007 the carrying cost of the Company's 
investment in Pro2 was GBP3.7 million (comprising the equity stake and 
shareholder loan referred to above and goodwill). 
 
 
In late 2005 Alkane provided a working capital loan to Pro2 and the final 
repayment of EUR2.0 million was repaid on 30 January 2009. The total receipts from 
the sale together with the final tranche of the working capital loan are EUR7.56 
million.  This figure is expected to be around book value. 
 
 
Deutsche KWK already has a significant presence in the cogeneration and biogas 
market, in which it is looking to further invest. The combination with Pro2 
fulfils this strategy in part and eliminates Alkane as a minority shareholder in 
the business as Pro2 grows in the future.  Alkane has a range of CMM projects 
under development which offer potentially higher returns to our shareholders. 
Following the receipt of the cash from Deutsche KWK, Alkane will employ a 
proportion of this additional capital to accelerate its strategy of developing 
additional power generation capacity in the UK. 
 
 
Alkane and Pro2 intend to continue their excellent working relationship in the 
future, and Pro2 will be Alkane's preferred supplier of generation plant for the 
next two years. 
 
 
Trading update 
 
 
The Group is pleased to confirm that the performance of its continuing 
operations remain in line with market expectations for the year ended 31 
December 2008. Profit before tax for the year is expected to be ahead of market 
expectations as a result of certain non-recurring, non-operating cash and 
non-cash items.  The non-recurring items relate to foreign translation gains, 
sales of surplus leases, impairment provisions and other non-recurring costs and 
remain subject to final audit confirmation. 
 
 
Commenting on the transaction Neil O'Brien, Chief Executive of Alkane said: 
 
 
"We are delighted to have concluded this transaction with Deutsche KWK, which 
has been interested in investing in Pro2 for a number of years. Also we look 
forward to continue working with Pro2 to capitalise on the exciting clean-tech 
energy opportunities available in the UK and European gas to power markets. 
 
 
"With these additional funds Alkane is now well positioned to increase 
investment in its core CMM business. We have set ourselves the target of 
reaching 50MW of installed capacity in the next few years and the capital 
provided by this transaction is a critical stepping stone in achieving this 
strategic aim." 
 
 
For further information please contact: 
 
 
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| Alkane Energy plc                      |                           01623 827927 | 
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| Neil O'Brien, Chief Executive          |                                        | 
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| Steve Goalby, Finance Director         |                                        | 
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| Brewin Dolphin                         |                          0845 270 8610 | 
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| Andrew Emmott                          |                                        | 
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| Buchanan Communications                |                          020 7466 5000 | 
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| Ben Willey                             |                                        | 
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| Miranda Higham                         |                                        | 
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Notes to the Editors 
 
 
Alkane Energy plc is a clean-tech energy company based in the UK. The strategy 
of the business is to develop gas to power generation assets utilising damaging 
greenhouse gas emissions from abandoned coal mines and in doing so reduce their 
climate change impact. 
 
 
Alkane currently operates seven plants in the UK, with an additional one in 
Germany.  The Company has a total output capacity equivalent to about 20MW. 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 MSCEAXDFEANNEFE 
 

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