Waste2Tricity Agrees £1.2 million Thai Commercialisation Plan

31 Oct 2013

AFC

AFC Energy plc (AIM: AFC), a fuel cell energy developer for industry, is pleased to announce that on 30 October 2013 it entered into a commercialisation agreement (the “Agreement”) with Waste2Tricity International (Thailand) Ltd (“W2T Thailand”), a majority owned subsidiary of Waste2Tricity Ltd ("W2T"), which grants W2T Thailand with exclusive long term rights for the application of AFC’s technology to the waste-to-energy market in Thailand. The Agreement builds on a commercialisation deal for the UK market announced in April 2012 whereby W2T would promote and develop projects involving the integration of the Company’s fuel cell products with hydrogen derived from the gasification of municipal solid waste to generate renewable energy.

The Agreement will extend AFC Energy’s reach into the fast growing emerging markets of South East Asia, beginning with Thailand, where demand for electricity is forecast to grow by an estimated 4.4% per annum for the next 15 years1. Further, the volume of municipal waste generated due to rising living standards and population growth, is expected to increase by an estimated 3.5% per annum, to 20 million tonnes annually by 20222.

Under the terms of the Agreement, the Company will receive a non-refundable appointment fee of £1.2 million payable in stages over four years, as follows:

  • £155,000 by 31 December 2013
  • £  55,000 by 31 March 2014
  • £125,000 by 31 December 2015
  • £185,000 by 31 December 2016
  • £680,000 by 31 December 2017

W2T Thailand will be AFC Energy’s exclusive agent for an initial term running until 2024 in Thailand for securing fuel cell system supply contracts from projects where waste is gasified, from which AFC Energy expects to derive further revenues. W2T Thailand will receive a commission of 33%, subject to a deduction of an amount equal to the price of all products and services supplied by AFC Energy pursuant to contracts in respect of which such commission is payable.

AFC Energy and W2T have collaborated closely since the UK agreement was signed to target and develop waste-to-energy opportunities at home and abroad. W2T was established to initiate waste-to-energy projects using the most economically viable technologies available. W2T selected AFC Energy's fuel cell systems as being potentially the most efficient technology for generating electrical power from gasified waste.

Ian Williamson, Chief Executive of AFC Energy, said: “This agreement is an excellent example of our continuing close relationship with Waste2Tricity. We have been looking at countries around the world where we expect to see the greatest return for our shareholders and waste-to-energy in Thailand shows great promise. The energy needs of the southern Asian countries are expected to continue growing rapidly in the coming years and this is an example of how AFC Energy plans to commercialise and embed its technology in key energy markets worldwide. This is not an overnight process but we are putting in the relationships and preparing for our initial projects as they are delivered by Waste2Tricity.”

John Hall, Managing Director of W2T, said: “We have actively targeted and prioritised Thailand and the ASEAN economies for waste-to-energy projects over the past two years. We are now in advanced discussions with potential local partners to develop a pipeline of projects in Thailand and assess opportunities elsewhere. So today’s agreement comes at an exciting time both for W2T and AFC Energy and we believe this agreement will open a significant market that will benefit both companies in the years ahead.”

The Agreement constitutes a related party transaction under the AIM Rules for Companies, as the Age of Reason Foundation, which is a substantial shareholder in AFC, and its associated entities, control more than 30% of W2T. The Directors of AFC, having consulted with the Company's nominated adviser, Allenby Capital Limited, consider that the terms of the Agreement are fair and reasonable insofar as the shareholders of AFC Energy are concerned.

Notes

1. Siam Commercial Bank

2. Pollution Control Dept, part of Thai Ministry of Natural Resources and Environment

     

Source: AFC Energy

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