TIDMSTOB
RNS Number : 6302X
Stobart Group Limited
21 November 2014
21 November 2014
Stobart Group Limited
("Stobart" or the "Group")
Financial Close and Long Term Supply Agreement on 20.2MW CHP
biomass plant
The Board of Stobart Group Limited, the Support Services and
Infrastructure group, is pleased to announce financial close on a
project to construct a GBP110m, 20.2MWe/ 7.8MWth combined heat and
power biomass plant ("CHP Plant") at the Group's site in Widnes. In
conjunction with the project the Group has signed a 16 year
index-linked fuel supply agreement.
The project will be the largest waste wood renewable energy
plant in the North West.
Highlights
The CHP plant is scheduled to commence operations in December
2016 and will generate returns for the Group's complementary
Energy, Infrastructure and Rail (Civil Engineering) divisions.
-- Stobart Energy will supply 146,000 tonnes p.a. of recycled
waste wood to the CHP Plant over 16 years (initial revenue of
GBP5.7m p.a., index linked over the life of the agreement, equating
to an estimated GBP108m)
-- Stobart Energy will operate an adjacent wood drying facility
using the heat from the CHP Plant. This facility will dry 140,000
tonnes p.a. of virgin wood material and produce an output of 90,000
tonnes p.a. for sale into the small scale market (expected revenue
of over GBP200m during the life of the agreement)
-- These volumes represent 24% of the increase required to
achieve Stobart Energy's fuel supply target of 2m tonnes p.a. by
2017/18
-- Stobart Infrastructure is investing GBP7.5m for a 40%
interest in the plant's holding company and will realise GBP2m from
the sale of the 4 acre site on which the CHP Plant and the wood
drying facility will be built
-- Stobart Rail (Civil Engineering) expects to generate around
GBP15m of civil engineering revenue from the project
Overview
Stobart Infrastructure is making an equity investment of GBP7.5m
for a 40% interest in the CHP Plant's holding company, Mersey
Bioenergy Ltd ("MBL"). The Green Investment Bank will provide 49%
of the equity (via its Foresight-managed fund) and Burmeister &
Wain Scandinavian Contractor A/S ("BWSC"), the project's
engineering, procurement and construction contractor, will take an
11% stake
Stobart and BWSC have been working together on the development
of the CHP Plant for a period of almost two years. BWSC will manage
the facility under a long-term operation and maintenance contract.
BWSC is a Danish company with an impressive track record of
delivering biomass plant projects around the world.
Investec Bank plc and Eksport Kredit Fonden are providing a
Senior Debt Facility of GBP42.5m to MBL for the development of the
plant. Mezzanine finance of GBP41.9m will be provided to MBL by GIB
and Gravis Capital Partners.
Stobart Energy
Stobart Energy will supply the CHP Plant with 146,000 tonnes of
waste wood material p.a. over a 16-year contractual period, with
initial revenue of GBP5.7m p.a., index-linked, equating to a
revenue stream of GBP108m over the life of the contract.
The plant will also produce 7.8MWth of heat, which Stobart
Energy has contracted to use in an adjacent wood drying facility.
This facility will be constructed by Stobart Rail at a cost of
GBP5m, and will receive 140,000 tonnes p.a. of virgin wood material
and dry this material to produce an output of 90,000 tonnes p.a.
Stobart Energy intends to sell this material into the
rapidly-expanding small scale wood chip and pellet market. The
expected revenue from drying facility operation will be over
GBP200m over the life of the agreement.
Stobart Infrastructure
Stobart Infrastructure will own the Group's investment in MBL.
The plant will be built on 4 acres of Stobart Infrastructure's
90-acre logistics hub in Widnes. The 4-acre site will be sold by
Stobart Infrastructure to MBL for GBP2m.
Stobart Rail (Civil Engineering)
Stobart Rail, which has a proven track record in construction
and engineering, will construct the dryer facility, procure the
equipment and install it. Stobart Rail also expects to generate
revenue as a civil works sub-contractor to BWSC for the
construction of the CHP Plant. The value of these two civil
construction contracts will be approximately GBP15m.
Richard Butcher, CEO Stobart Energy & Infrastructure
commented,
"This agreement secures an attractive energy investment for the
Group and will contribute 24% of the growth we need to achieve our
target of supplying 2m tonnes of fuel per annum into the UK biomass
market by 2017/18 from 1m tonnes per annum at present . It also
demonstrates the strength of our integrated infrastructure, energy
and engineering capabilities.
This CHP Plant will generate a strong return on investment in
the plant's equity as well as providing the Group with a 16 year
biomass fuel supply contract, a long-term wood drying income stream
and valuable engineering revenue on the development.
Increasingly, we are seen as being a very reliable fuel supplier
and so the partner of choice, which is why we are already the
leading UK supplier of biomass, a position which we anticipate
strengthening further"
A call for analysts with Stobart Group will be hosted at 9.30am
on Friday 21 November 2014. For dial in details contact
Stobart@redleafpr.com.
Enquiries:
Stobart Group +44 20 7851 9090
Andrew Tinkler, Group Chief Executive
Officer
Richard Butcher, CEO Energy & Infrastructure
Redleaf PR +44 20 7382 4730
Emma Kane Stobart@redleafpr.com
Rebecca Sanders-Hewett
Charlie Geller
influence Associates +44 20 7287 9610
Stuart Dyble
James Andrew
Notes to Editors
-- Focus on Energy and Aviation: Stobart Group is an
Infrastructure and Support Services business deriving income from
Energy, Aviation, Civil Engineering and Investments. Its strategy
is to drive growth and profitability in Energy and Aviation.
-- Growing volumes: Stobart sources, processes and delivers fuel
to power plants for third parties under long-term contracts.
Revenue growth comes from the ongoing increase in tonnages
supplied, which exceeded 900,000 tonnes in the year to February
2014.
-- Growing passenger numbers: Capital expenditure to develop
London Southend Airport is largely complete with the extension of
the terminal increasing capacity from one to five million
passengers. Growing passenger numbers from a broadly fixed cost
base will drive profitability.
-- Realising value: Stobart will continue to maximise value from
its property Investments to support maintained dividends.
-- Value creation: The Group realised a 51% interest in its
Transport & Distribution business and used the proceeds to
reduce its debt significantly, invest in its Infrastructure and
Energy divisions and return funds to shareholders.
-- Investing for growth: Stobart plans to invest in minority
stakes in sustainable CHP and anaerobic digestion plants over the
next two years.
-- Strengthened board:Stobart has significantly strengthened its
board with the appointment of former Tate & Lyle CEO Iain
Ferguson CBE as its new chairman and three new Non-Executive
Directors.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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