AIM-listed EnergyPathways, an energy transition company developing low carbon integrated energy solutions in the UK, has entered into a £5.1 million loan facility for its Marram Energy Storage Hub ('MESH') infrastructure project, a large-scale clean energy storage facility. The loan facility is able to support the MESH project through the FEED phase with a view to reaching FID at the end of 2025.
EnergyPathways has entered into a binding loan facility ('Green Loan') with Global Green Asset Financing Limited ('GGAF'). GGAF is a new, Luxembourg-based green project and corporate financing platform structured to provide its investors with green impact and yield income returns in sectors including cleantech and renewable energy. Under the terms of the Green Loan, EnergyPathways has entered into a loan facility of up to £5.1 million with a minimum commitment from the lender of £2.55 million over the term. Drawdowns from the Green Loan will be subject to GGAF raising further capital which is currently underway. Drawdowns must commence during Q4 2024, and will be phased in line with EnergyPathways' planned use of funds on the MESH project to develop a fully decarbonised integrated natural gas and green hydrogen energy storage facility. GGAF plans to fund the Green Loan through an issue of 5-year interest bearing notes due 2029 (the "C3 Notes") and it has commenced the initial placing of the C3 Notes with international investors. GGAF has agreed to prioritise any distributions requested under EnergyPathways' Green Loan as the C3 Notes are issued.
Green Loan Facility
The Green Loan has a 3 year term with the principal amount repayable on the maturity date. Interest is charged on drawn down amounts at a fixed rate of 12.5% per annum and is payable monthly. The terms of the Green Loan provide for early repayment, including accrued interest, without premium or penalty. Warrant rights are to be issued to GGAF pro-rata on drawdowns, with the number of warrants calculated as the GBP value of each drawdown divided by the exercise price. The warrants will be exercisable from the maturity date for a term of one year. Their exercise price will be equal to the 30 day VWAP share price at the maturity date less a 20% discount. Drawdown debt is secured via a fixed charge over any Company tangible or intangible asset financed by the loan, plus a fixed charge over all of its shares in any subsidiaries at the date of execution including EnergyPathways Irish Sea Limited and EnergyPathways UK Holdings Limited. A placement fee of 2% will be payable to Jexium Ltd, as originators, on drawdowns.
The Green Loan facility will give EnergyPathways financial flexibility, enabling it to access debt with minimal shareholder dilution in the critical pre-development stage and allowing the principal loan amount to be potentially repaid from future MESH revenues. The facility can also sit alongside and complement other infrastructure and cleantech financing arrangements being evaluated by the Company for the MESH development.
About MESH
The MESH natural gas and green hydrogen storage facility, located off the UK'sLancashire coast, will be equivalent in size to the Rough facility, currently the UK's largest gas storage facility. It willhave a storage capacity of ~15TWh (~500 million therms or ~50 billion cubic feet of gas). EnergyPathways has further identified growth upside and plans to expand the MESH storage capacity by as much as three times, including developing upscaled green hydrogen storage capacity.
EnergyPathways is forming a stakeholder partner group for the MESH integrated energy project comprising several global leading Tier-One engineering and energy companies. It plans to complete pre-FEED by the end of 2024 and FID at the end of 2025.
Commenting on the update, Ben Clube, CEO of EnergyPathways, said:
'We are very pleased to have secured this green loan facility with GGAF, CSM Securities and Jexium Ltd - innovators in cleantech and renewable energy financing.
'To be selected for inclusion in the GGAF investment portfolio validates EnergyPathways as a low emission energy transition company. The Green Loan will provide a funding facility to progress the MESH project through the FEED phase with a view to reaching FID at the end of 2025. It will also position EnergyPathways to build on its leading position in the rapidly growing multi-billion pound energy storage sector in the UK.
'This transaction demonstrates the strong investment appeal of EnergyPathways' MESH project as a cleantech integrated energy infrastructure solution able to deliver reliable and decarbonised energy supply to the UK and its potential to deliver high yield infrastructure returns to investors over the project's 20 year life.
'EnergyPathways has received a number of offers of financing, confirming the Company's view that its business model is well positioned to attract investment capital. The Green Loan facility, which offers good flexibility as well as access to minimally dilutive funding, demonstrates EnergyPathways' commitment to financial discipline and delivering long-term shareholder value. EnergyPathways remains focused on developing additional cleantech and infrastructure financing solutions for the development of the MESH project.'
Commenting on the facility, Joe Lufkin, Group Managing Director of Jexium Ltd and GGAF said:
'We are excited to be part of EnergyPathways' MESH and Marram projects, to be able to include these top-quality assets in the GGAF portfolio, and to provide financing support for such a strategic component of the UK's national energy transition.'
Source: EnergyPathways
