| Mon 6 Dec 2010, 9:00 | | IPS - IPSA Group Plc - Trading update and dispute with Sasol Gas Limited |
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IPS
IPSA
IPS - IPSA Group Plc - Trading update and dispute with Sasol Gas Limited
IPSA GROUP PLC
(Incorporated and registered in England and Wales)
(Registration Number 5496202)
AIM Share Code IPSA ISIN GB00BOCJ3F01
JSE Share Code IPS ISIN GB00BOCJ3F01
("IPSA" or "the company")
TRADING UPDATE AND DISPUTE WITH SASOL GAS LIMITED
IPSA PLC (AIM:IPSA), the developer, owner and operator of power generation
capacity in Southern Africa, announces a trading update following initiation of
proceedings by Sasol Gas Limited.
The Company announces that Sasol Gas Limited ("Sasol Gas"), which is the
monopoly gas-producer and primary supplier of gas in South Africa, has commenced
legal action against the Company`s wholly-owned subsidiary, Newcastle
Cogeneration Pty. Limited ("NewCogen"), for sums claimed under the gas supply
agreement terminated in August 2009 amounting to approximately GBP4m. These
sums principally relate to `take or pay` penalties incurred as a result of the
plant not running due to the lengthy delays in concluding a power purchase
agreement. Any further action taken by Sasol Gas will be vigorously defended.
Notwithstanding this earlier termination, Sasol Gas did supply gas for the short
term running of the Newcastle plant at the time of the FIFA World Cup finals in
South Africa between June and August 2010, on a cash upfront basis. NewCogen
subsequently signed a power purchase agreement under the MTPPP with Eskom, the
South African electricity parastatal, as announced on 31 August 2010. Therefore
IPSA does intend to negotiate terms for the long term supply of fuel to this
plant by Sasol Gas.
Over the last few years the Company has been actively seeking to sell its four
Siemens Westinghouse 701 DU gas turbines (the "Turbines") which were originally
acquired for the delayed Coega project at Port Elizabeth, South Africa. Whilst
strict cost containment measures were implemented earlier this year and with no
revenues currently being generated, the Group`s working capital position will
continue to be extremely tight unless the Company is able to sell the Turbines
at an acceptable price or is otherwise able to raise further working capital in
the intervening period. Outstanding debt, accrued interest and other creditors
of the Group currently amounts to approximately GBP36m.
Approximately GBP30m of the total outstanding debt is at present subject to a
standstill agreement with Standard Bank PLC and Turbocare SpA following
execution of an agreement on 5th March 2010. Although this agreement terminates
on 31 January 2011, Standard Bank PLC is able to terminate it at any time
because no sale of the Turbines was completed by 30th November 2010. However,
IPSA has notified the bank that it is in negotiations to sell the turbines for
an amount in excess of its liabilities, although no contract has yet been
executed and there is no guarantee of a successful outcome.
London
6 December 2010
For further information contact:
Peter Earl, CEO, IPSA Group PLC +44 (0)20 7793 5615
John Llewellyn-Lloyd / Harry Stockdale, Execution Noble & Company Ltd +44
(0)20 7456 9191
Riaan van Heerden, PSG Capital (Pty) Ltd +27 (0)21 887 9602
Date: 06/12/2010 09:00:02 Produced by the JSE SENS Department.
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