Kedco offers equity for debt swap

Cork-based renewable energy group Kedco is restructuring its finances in a bid to raise more money from investors to unlock the value in future projects.

Kedco is looking to remove the debt from the company’s balance sheet and have its creditors take an equity stake in the company.

The Kedco group will remove €10.8m in debt from the group, as well as selling its 80% stake in SIA Vudlande, a Latvian saw mill. The decision to sell the Latvian operation is part of the group’s strategy to return to its core business in Ireland and England.

As part of the plan, some of the lenders will write off 40% of the interest owed. All of the group’s lenders will convert outstanding loan capital into a stake in the company.

Interim CEO and finance director Gerry Madden described the development as very positive for Kedco, as it has the backing of its creditors.

“It is a very positive step that the debt holders are taking equity in the group,” said Mr Madden. “It allows us to go and seek money in the markets.”

Kedco noted in its interim results from Dec 2011 that if it was not able to secure funding, it could be forced to cease trading.

“Kedco noted that its ability to continue as a going concern was contingent upon additional finance being made available for the company’s working capital requirements and a successful outcome to debt restructuring initiatives undertaken by the group,” Kedco said.

Mr Madden said that, like many businesses, Kedco had faced a tough couple of years but with the backing of its creditors it has a more positive future.

He said that Kedco’s largest shareholder, FBD, understood the value of the projects Kedco has in the pipeline.

Kedco recently moved from developing renewable energy projects into operating them. On Jun 27, the company announced the initial commissioning of the Newry Biomass plant, marking Kedco’s transition from being a clean energy project developer to becoming a clean energy producer. The plant has started production of syngas for the generation of electricity.

A similar larger project, the Enfield Biomass project in London, is progressing well and has full planning and permission to convert 60,000 tonnes per annum of waste wood into electricity and heat inside the M25.