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RNS Number : 7184O
Oracle Power PLC
31 January 2019
 

31 January 2019

 

 

ORACLE POWER PLC

("Oracle" or the "Company")

 

Pre-development funding plan for financial close

 

 

Oracle Power PLC (AIM:ORCP), the UK energy developer of a combined lignite coal mine and mine mouth power plant located in the Thar desert in the south-eastern Sindh Province of Pakistan, announces that the parties in the consortium (as announced on 20 December 2018), being Oracle,  Beijing Jingneng Power Company Limited ("BJPC") and PowerChina International Group Limited ("PowerChina"), have confirmed their willingness to provide a minimum of US$2.5 million pre-development project funding.  This follows the Memorandum of Understanding ("MOU") signed between the parties on 19 December 2018.

 

The funding is expected to be provided by the parties in proportion to their intended shareholdings in the project, as envisaged by the MOU:

 


Intended Equity %

US$ million

(minimum)

BJPC

78%

1.95

Oracle

12.1%

0.30

PowerChina

9.9%

0.25

 

Oracle believes that this funding, as well as any bank guarantees that may be provided by BJPC and PowerChina, should be sufficient to meet project costs up to financial close, although it is anticipated that further funding can be provided on the same basis, if required. The structure and timing of the funding is to be jointly agreed between the parties in the near term and the Company will provide a further update(s) in due course.

 

The overall phase one of the project, involving mining 4 million tonnes of coal annually and feeding a 700 MW power plant, is estimated to have a gross cost of US$1.6 billion. A debt equity ratio of 75:25 is anticipated, with the Chinese partners responsible for sourcing all the debt through Chinese banks, expected to be readily accessible given Block VI's inclusion in the Priority List of the China Pakistan Economic Corridor. The anticipated US$400M equity component is to be funded on a pro rata basis as above, although under the MOU it is agreed that Oracle's historical expenditure and financing of the project can be used to (part) offset its commitment.

 

 

Naheed Memon, CEO of Oracle, commented:

 

"This is a significant development for Oracle as we progress our work with BJPC and PowerChina. Once finalised, this will be the first time our partners deploy their own capital directly into the Project. As outlined in the MOU, the MOU Consortium has agreed that the funding should be provided on a pro-rata basis to the intended equity interests in the project. Initially it was envisaged that Oracle would fund all costs ahead of financial close, with subsequent reimbursement upon reaching financial close. This development therefore is warmly received by the Company and should give Oracle shareholders significant optimism with regards the likelihood and timing of reaching financial close.

 

"The MOU Consortium is now planning the detailed work to achieve the milestones that are described in the Operational Update of 17 January 2019.  Block VI is a project of both national and international significance, evidenced by its inclusion on the Priority List of the China Pakistan Economic Corridor (CPEC). We have witnessed strong support from both the Pakistan and Chinese Government Authorities over recent months and are eager to bring the Project to financial close.

 

"We will keep shareholders informed as milestones are achieved."

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

For further information:

 

Oracle Power PLC

Shahrukh Khan

 

+44 (0) 20 3580 4314

Strand Hanson Limited (Nominated Adviser)

Rory Murphy, James Harris, Jack Botros 

 

+44 (0) 20 7409 3494

Brandon Hill Capital Limited (Joint Broker)

Oliver Stansfield

 

+44 (0)20 3463 5000

Peterhouse Corporate Finance (Joint Broker)

Charles Goodfellow

 

+44 (0)20 7220 9791

Blytheweigh                                                  

Tim Blythe, Camilla Horsfall, Megan Ray 

+44 (0) 20 7138 3204

 


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