The various agreements involved in the deal encompass a subscription agreement and technical and equipment supply agreements. They also discuss conditions for future commercial algae plants following the successful completion of the pilot plant.
Shares to the value of $1.5 million will be issued with $5 million of options to RIIHL. Both the shares and the option exercise price are set at the 90 day volume weighted average share price, which equates to 16.3 cents per share. The shares will be issued immediately and RIIHL will make additional investments by exercise of $1.2 million of options over the next two years.
The technical and equipment supply agreements detail the technical goals that Algae.Tec will have to meet and the costs that RIIHL will pay for the pilot plant and technical supervision.
“This is a very exciting step forward by Algae.Tec” said Peter Hatfull, Algae.Tec’s Managing Director. “The new biofuels facility to be built in India, will be fully funded by Reliance Industrial Investments and Holdings Limited (RIIHL), leaving the equity injection to be used solely for working capital purposes.This level of financial backing and ongoing support is just what Algae.Tec needed. It’s a fact of business life that emerging companies need funding injections and the technical grunt of this type to transition into the commercial phase.”
The agreement is good news for Algae.Tec and the algae biofuels sector, Mr Hatfull added.
Algae. Tec’s Biofuels Division operates from the company’s facility in Atlanta through its wholly-owned subsidiary Algae Energy Inc. The company’s vision is to work with RIIHL, which is part of the Reliance Group, India’s largest private sector enterprise, for many years to come. The company will be able to deploy its growth platform technology in order to produce algae biofuels in India and expand the business throughout Asia meeting the increasing fuel demand.
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