Europlasma: Progress and Financing for the Development of CHO-Power(R) Power Production Units

PARIS, June 14, 2010 /PRNewswire-FirstCall/ -- After signing the letter of intent in April 2010 with a fund specialised in renewable energies for the development of CHO-Power activities, Europlasma, the French group specialized in clean technologies and renewable energy production, is reporting on progress made with the project to develop the Morcenx biomass power production plant and is announcing various developments in relation to the strategic approach initially considered.

Progress made with the Morcenx CHO-Power unit

The CHO-Power production unit is a unique concept in the world of energy reclamation from residual waste and/or biomass, based on the gasification technique and improved with the technological advances enabled by the plasma torch.

Following the announcement on April 8th, 2010 concerning the signing of a letter of intent, the administrative due diligence processes have been finalized and the Board of Directors has validated the term sheet[1] project with Europlasma's financial partner. The next steps (in June 2010) will focus on finalizing the legal and administrative procedures to ratify the partnership between Europlasma and the investment fund.

At this stage, the principles retained for financing the project provide for a total of EUR36 million of resources over 30 months, with EUR12.7 million to be covered by Europlasma. More specifically, a part of the Europlasma contribution will enable the Group to have a 25% capital stake in CHO-Power Morcenx as soon as work begins to build the CHO-Power plant in Morcenx, a 12 MWe unit production capacity. In addition, under a performance incentive mechanism, Europlasma may increase its interest in CHO-Power Morcenx up to 45%. Meanwhile, the EPC contract (Engineering, Procurement & Construction) of the CHO-Power Morcenx plant, will represent approximately 15 million EUR of revenues in 2010 for Europlasma, with the civil work beginning in July. The contribution of the capital financed by Europlasma is needed for the definitive sealing of the agreement and the project's operational launch.

Overall the financing process will be dedicated to building CHO-Power production units with a capacity of 54 MWe over three years, with the option to extend this financing to cover the building of a total of 200 MWe over five years. As a result, the Group's financial partner will be able to contribute EUR50 million.

Europlasma's strategy for implementing the definitive agreement

Strengthening its capital: In connection with its April 8th, 2010 communication, Europlasma was looking to finance its contribution with the increase in equity capital resulting mainly from the exercising of existing warrants (BSA). Faced with a difficult market environment, the majority of these warrants have not been exercised and expired on May 31st, 2010. In this context, the Board of Directors now intends to carry out a capital increase. Indeed, out of the EUR12.7 million financed by Europlasma, the Company will be inviting its shareholders and the financial market to accompany it in this final development phase for EUR6 million. The various possibilities reviewed by the Board of Directors revealed that, despite a comfortable level of cash flow, the investment needed could not be covered in full by Europlasma without undermining the Group's current business. In this way, two operations, backed by the Company's main shareholders, could be launched shortly:

    - a first issue, with preferential subscription rights
      maintained, open to all shareholders for a total of approximately EUR2
      million, and

    - a second issue, reserved for qualified investors, for EUR4
      million. Moreover, this issue would result in preferred shares being
      created, with the corresponding rights being exclusively political, no
      special financial rights being granted[2].

The delegations of authority prior to carrying out the private placement (second operation presented above) and therefore finalizing the financing of the first CHO-Power Morcenx project will be submitted for approval by shareholders at the General Meeting on June 30th, 2010. The projects are presented in detail in the "Board of Directors' report for the Ordinary and Extraordinary General Meeting on June 30th, 2010", available on Europlasma's internet site.

As Didier Pineau explains: "This is a key step for the launch of the first CHO-Power plant. The market context is difficult, but we must continue moving forward in order to confirm this outstanding opportunity for development in the field of renewable energy production. The Company's management team is fully committed to completing this final stage, which Europlasma will contribute towards; at the same time, we have looked into the solutions that will enable us to not only engage our shareholders in the operation, but also meet the needs for speed and maximizing the funds raised by calling on professional investors."

Modifying its governance: Following on from the structuring initiatives launched in 2009 to further strengthen the Group's governance and organization (creation of four permanent committees[3]) and with a view to the development of CHO-Power units, new measures would have to be implemented:

    - Separating the functions of Chairman and Chief Executive
      Officer. Mr. Didier Pineau will devote himself entirely to his position
      as the Group's Chief Executive Officer once the capital increase has
      been carried out. A Chairman of the Board of Directors will be
      appointed at a coming Board meeting.

    - Appointing a new director, Mr. Erik Martel, representing
      Credit Suisse Europlasma SPV LLC, Europlasma's leading shareholder.

    - Appointing Mr. Pierre Catlin, a member of the Strategy and
      Investment Committee, as an independent director.

Further to these appointments, the Board of Directors would have six members, including two independent directors.

Furthermore, Cedric Berard, Europlasma's Chief Legal and Financial Officer, is leaving the Group to pursue a new activity in capital development. Since CHO-Power's financing is currently being finalized, Mr. Berard has successfully completed his main mission. He has also played an effective role in improving the profitability of the Group and its companies. A process to recruit a new Chief Financial Officer is already underway.

About Europlasma

Founded in 1992, Europlasma is a French Group specialized in clean technologies and renewable energy production. The Europlasma Group is made up of four main units and 260 employees who are all firmly committed to sustainable development and experts in waste processing and reclamation.

    - Europlasma develops, produces and markets waste processing
      and energy production solutions based on its proprietary plasma torch
      technology.

    - Inertam is the global specialist for the destruction and
      reclamation of asbestos and hazardous waste.

    - CHO Power is a waste gasification power producer (EfW -
      Electricity from Waste).

    - Europe Environnement is the European market leader for
      ventilation and air depollution systems for industry.

[http://www.europlasma.com] [Alternext - NYSE Euronext Paris - Ticker: ALEUP - ISIN: FR0000044810]

[1] Term sheet: main terms and conditions for investment.

[2] The rights associated with preferred shares are to: (i) participate in the Company's governance through a directorship that would be awarded to them; (ii) approve beforehand certain deeds for arrangements that might deprive the Company of its essential assets or a substantial part of them.

In return for these rights, the period for which would be limited to three years, two constraints would apply for investors taking part in the private placement: (i) the requirement to hold such shares on a registered basis (at the risk of losing the corresponding rights) ;(ii) the fact that there would be no listing on Alternext for the preferred shares; (iii) the impossibility to subscribe to or to be awarded new preferred shares.

[3] Accounts Committee, Appointments and Compensation Committee, Strategy and Investment Committee, Scientific Committee.

    Press and investor contacts

    Europlasma
    Didier Pineau / Anne Borderes
    [email protected]
    Tel: +33-5-56-74-73-72

    Atout Capital Finance
    Eric Parent / Melanie Bonanno
    [email protected]
    Tel: +33-1-56-69-61-81

    Calyptus
    Marie Ein / Alexis Breton
    [email protected]
    Tel: +33-1-53-65-68-68

SOURCE Europlasma