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Utilico is providing Renewable Energy Holdings with a loan facility of up to £1.75m so that it has working capital while it seeks to sell all of its assets.
Utilico is REH’s largest shareholder with 28.7% and it is taking substantially all of REH’s assets as security for the loan – subject to those assets granted as security for the loan from EDF.
However, £750,000 of the loan facility will be used to repay the EDF loan, which will release the security.
The new facility has an annual interest charge of 10% and there will be a £50,000 arrangement fee. A success fee will be payable to Utilico if REH gains planning permission for its 81MW Welsh wind farm development known as Mynydd Y Gwynt and it sells its entire interest, enters a joint venture other than with Utilico or borrows from anyone other than Utilico. If this development is not sold within 12 months of gaining final planning permission then Utilico can recall the loan and demand payment of the £4.75m fee.
This agreement is an alternative to pre-selling the development where some of the upside would have been lost.
Up to £5m could become payable to Utilico if the disposal proceeds of REH’s assets are more than £37.5m. Total assets were worth £10m in the balance sheet at the end of June 2012 but that is before gains from planning permission.
At 1.88p a share, REH is valued at £1.31m. REH still plans to leave Aim in the next few months. It is seeking a buyer for its Polish wind farm development. Assuming planning permission is received for the Welsh wind farm development then its value will be boosted significantly.
Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFJanuary2013_40.pdf
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