Sale and purchase option agreed over Altalto Project site with Foresight Group LLP
24 Mar 2022
Velocys plc (AIM: VLS), the sustainable fuels technology company, announces that further to the notification of 17 December 2021 (“Prior Announcement”), Altalto Immingham Ltd (“Altalto”), a subsidiary of Velocys, has sold its 100% interest in Rula Developments (Immingham) Limited (“RDIL”), as planned. RDIL owns the site for the proposed Altalto waste-to-sustainable-fuel project, which is being developed in collaboration with British Airways.
RDIL has been sold to funds managed by Foresight Group LLP (“Foresight”), for £9.75 million, with a call option for Altalto to re-purchase RDIL within three years (“Call Option”). The Call Option will require Altalto, and any new project partners, to pay up to £12.95 million in aggregate over the option period (the majority of which relates to a final payment in the event of exercise of the Call Option).
In addition, and subject to exercise of the Call Option, Altalto has agreed to grant Foresight a right of first refusal to invest up to £100 million in the project, alongside British Airways and other future investors, once the full funding is required.
Foresight brings a proven track record and history of investing in energy transition infrastructure. Following the sale, the Project has retained the right to access the land for maintenance and pre-development activities associated with its existing planning permission. Commencement of construction remains subject to further clarification of government policy support for such projects.
This agreement follows on from the Prior Announcement, when Altalto exercised an option to acquire a 100% interest in RDIL with an initial part-payment of £2.5 million and deferred consideration. The deferred consideration payable is £7.25m, which will now be settled as part of this transaction, thereby satisfying all obligations under the historic option agreement.
Henrik Wareborn, CEO of Velocys, said:
“Velocys is pleased to have Foresight involved in the Altalto project, alongside British Airways. This is a further step in bringing our SAF enabling technology solution to market.
“The Velocys technology pathway utilises domestic non-fossil feedstocks from sustainable carbon sources which have no alternative use, such as municipal solid waste and forestry residue. Sustainable aviation fuel has the same composition as conventional jet fuel, is globally approved and is suitable for immediate use. We firmly believe our technology will play a key role in helping to decarbonise the aviation sector, meet net zero targets, and improve the energy and fuel security of the UK.”
David Hughes, CIO of Foresight, said:
“Foresight is delighted to become involved in the Altalto project through the acquisition of the proposed site. The Project is consistent with our aims of investing in sustainable businesses that are looking to advance the energy transition.”
Sean Doyle, Chairman and CEO of British Airways, said:
“It’s great to have Foresight with us to help deliver the Altalto project, as we make our way on our journey towards net zero by 2050. The development of sustainable aviation fuel is an important part of our near to medium-term plan to decarbonise, alongside carbon capture technology. We believe the UK can be a world leader in this, and it’s crucial we work with both private industry and Government to drive forward this ambitious and hugely important work.”
Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) prior to its release as part of this announcement.
For further information, please contact:
Henrik Wareborn, CEO
Andrew Morris, CFO
Lak Siriwardene, Director of Communications & Sustainability
+44 1865 800821
Panmure Gordon (UK) Limited (Nomad and Joint Broker)
Hugh Rich (Corporate Broking)
Emma Earl (Corporate Finance)
John Prior (Corporate Finance)
+44 20 7886 2500
Shore Capital Stockbrokers Limited (Joint Broker)
Henry Willcocks (Corporate Broking)
Toby Gibbs (Corporate Advisory)
James Thomas (Corporate Advisory)
Liam Zabludowicz (Corporate Advisory)
+44 20 7408 4090
Radnor Capital (Investor Relations)
+44 20 3897 1830
Buchanan (Financial PR)
+44 20 7466 5000
Notes to Editors
Velocys is an LSE-listed, international sustainable fuels technology company, traded on the AIM, providing clients with a technology solution to enable the production of negative Carbon Intensity synthetic, drop-in fuels from a variety of waste materials. SAF (‘Sustainable Aviation Fuel’) is the only commercially available, permanent alternative to fossil aviation fuels.
The technology is IP-protected in all major jurisdictions.
Two reference projects (Altalto, UK, and Bayou Fuels, US) are designed to accelerate the adoption and standardise the Velocys proprietary Fischer Tropsch (FT) technology with an integrated end to end solution, including renewable power and carbon sequestration. Velocys is enabling commercial scale SAF production in response to the clean energy transition.
Velocys technology pathway is enabling the next generation of low carbon sustainable fuels with significant additional positive air quality impacts.
Foresight Group Holdings Limited
Foresight Group was founded in 1984 and is a leading infrastructure and private equity investment manager, operating from 12 offices across six countries in Europe and Australia with AUM of c. £8.4 billion as at 31 December 2021. With a long-established focus on ESG and sustainability-led strategies, it aims to provide attractive returns to its institutional and private investors from hard-to-access private markets. Foresight Group manages over 300 infrastructure assets with a focus on solar and onshore wind assets, bioenergy and waste, as well as renewable energy enabling projects, energy efficiency management solutions, social and core infrastructure projects and sustainable forestry assets. Its private equity team manages eight regionally focused investment funds across the UK, supporting over 120 SMEs. Foresight Group listed on the Main Market of the London Stock Exchange in February 2021.
As a global airline and the UK’s flag carrier, British Airways has been flying its customers to where they need to be for more than 100 years.
The airline connects Britain with the world and the world with Britain, operating one of the most extensive international scheduled airline route networks together with its joint business, codeshare and franchise partners.
British Airways flies to destinations in more than 65 countries. Its principal place of business is London, with its main home at Heathrow Terminal 5.
In 2021, the airline won six Business Traveller Awards including Best Short-Haul Carrier, Best Airport Lounge, Best Frequent Flyer Programme, Best Travel App and Best New Seat.
In September 2021, British Airways launched its sustainability programme, BA Better World, committing to put sustainability at the heart of everything it does and with a clear roadmap to achieve net zero carbon emissions by 2050.
British Airways is a founding member of the airline alliance oneworld, which serves around 1,000 destinations across the globe.