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CALGARY, Oct. 21 /CNW/ - (TSXV - NRG) - Alter NRG Corp. ("Alter NRG" or the "Company") is pleased to provide the following update on the Company's cash position, sales and strategic alliances opportunities and project development.
In response to the slowdown in the global economy and turbulent capital markets, Alter NRG is proactively refining its strategic plan to manage this new economic landscape. Alter NRG's corporate focus has shifted from internally-led project development to technology sales that preserve the Company's strong balance sheet. This involves focusing on generating increasing cash inflows through technology licenses and sales and reducing the capital expenditures on projects through smaller working interests and slowing project timelines.
"Alter NRG is moving forward with a focus on technology sales. Our existing strategic partnerships remain strong and we're excited about technology sales and licensing opportunities developing with new strategic partners," said Mark Montemurro, Alter NRG President and Chief Executive Officer. "During these turbulent economic times we remain committed to a strategic plan that is focused, while ensuring we continue to create value for our shareholders."
Cash Position ------------- At September 30, 2008, Alter NRG's net working capital surplus was approximately $54 million and the Company has no debt. Alter NRG's current general and administrative expenses are approximately $1 million per month. Sales and Strategic Alliance Opportunities ------------------------------------------
Alter NRG remains focused on increasing technology sales to provide shorter-term cash flows. By dedicating a greater amount of resources to technology sales and strategic alliance opportunities, Alter NRG will be well-positioned to support clients and their projects, and further strengthen the Company's position as a leading supplier of plasma gasification technology and services.
Alter NRG shifted its technology sales strategy early in 2008 to focus on companies that have strong balance sheets and a need for clean and renewable energy solutions. Over the past four months, the Company has met with more than a dozen qualified candidates and the interest generated from meetings with the large waste services and energy companies in North America and Europe have been positive - as they are actively looking for commercially-proven renewable energy solutions. Alter NRG will continue to pursue technology sales and alliances with well-capitalized companies in both North America and Europe.
Customer Project Development
----------------------------
Alter NRG's customers continue to advance their project development
opportunities and management believes they have the balance sheets and access
to capital to continue to execute these projects.
- The two hazardous waste facilities under construction in India are
continuing to advance with the first expected to be operational in
the fourth quarter of 2008, and the second in mid-2009. Both
facilities will use Alter NRG plasma gasification technology to
convert approximately 68 tonnes-per-day of hazardous waste into
power. The facilities are owned and operated by SMS Infrastructures
Limited, India's largest civil engineering and infrastructure
development company. These facilities will increase the commercial
facilities processing waste using Alter NRG technology from two to
four, and provide further commercial history for smaller-scale waste
solutions that can be replicated for future projects.
- Project Lighthouse, the 40,000 gallon per year ethanol commercial
demonstration project, which is being developed by Coskata and its
partner General Motors, is advancing on schedule and is expected to
be completed in the spring of 2009. The commercial demonstration,
will be located at the Alter NRG pilot facility in Madison,
Pennsylvania, and the existing plasma gasifier will provide the
synthesis gas ("syngas") which will than be converted to ethanol
through the Coskata's proprietary conversion process. This project is
expected to result in $2.5 million in revenues in 2009 for Alter NRG
and the capital costs are borne by Coskata for the project
development. This ethanol commercial demonstration is consistent with
Alter NRG's strategic focus, as it will bring key strategic customers
focused on renewable energy to the Alter NRG pilot facility in 2009.
- The Somerset project which is operated by NRG Energy will convert
coal and biomass into 120 MW of power, continues to advance. The
project received regulatory approval from the Department of
Environmental Protection of Massachusetts on January 25, 2008,
however it has been subject to various regulatory appeals since that
time. Alter NRG has an option to elect to take up 10% to 25% in the
project, at its sole discretion, and will have to make the election
once the project has final approval to proceed. Alter NRG believes
strongly in the Somerset project but will make its investment
decision based on several factors including the Company's access to
capital and the ability to obtain project debt. The Company is also
supporting NRG Energy's project development efforts on other waste-
to-energy projects and coal retrofit opportunities.
- Other project developers also continue to advance plasma gasification
opportunities. This includes the Geoplasma project at St. Lucie
County, Florida which has available municipal bond financing. This is
an example of approximately 10 projects worldwide in active
development using the Alter NRG technology. These projects are
subject to regulatory approvals and must obtain financing in order to
proceed.
Project Developers' Access to Capital
-------------------------------------
The capital market turbulence has significant impacts on the availability
of capital; however, management believes that renewable and clean energy
projects have advantages that will allow for easier access to capital as
follows:
- Projects using the Alter NRG technology are generally from
$50 million to $300 million in total capital and therefore are at a
small enough scale to attract the limited debt and equity financing
currently available to project developers.
- Regulatory incentives exist for clean fossil fuel and renewable
energy projects. These include loan guarantees in the US for clean
coal and renewable energy projects, grant money for projects which
involve CO(2) sequestration plus various government programs at the
Provincial, State, and Federal government levels for gasification in
Canada and the United States.
- Waste-to-Energy projects in the United States can be eligible for
tax-free municipal bond financing which can provide up to 95% of the
project financing.
- Alter NRG has lenders which have been actively performing due
diligence over the past six months and have expressed formal interest
in providing project-level debt. Several of these lenders have access
to capital and continue to deploy capital in these difficult market
conditions.
Although credit is a key issue for all project developers in this market, Alter NRG's technology solutions have unique advantages to access the limited capital, which includes government incentives, smaller project scopes, and strong relationships with the capital community.
Alter NRG Project Development -----------------------------
As a means to reduce Alter NRG's capital requirements the Company has adopted a more stepwise approach for internally-led projects in development.
Based on a slowing economy that may affect the outlook for power development in Alberta, Alter NRG will be delaying the decision to proceed on phase one of the Bruderheim power facility until the spring of 2009. Development of the first phase of the project had already commenced with the intention of having the 120 MW natural gas combined cycle ("NGCC") facility operational by early 2010.
In the spring of 2009, the Company will assess combining the two phases to complete the Bruderheim integrated gasification combined cycle ("IGCC") project that will convert petroleum coke and oilfield waste into 120 MW of power - including design for carbon capture and storage ("CCS"). Delaying the development of phase one of the Bruderheim project is expected to reduce the near-term capital requirements for 2008 and 2009 to under $2 million. Using this reduced budget, the Company will continue to advance project engineering, government grant applications and a strategic partner selection process to advance the Bruderheim IGCC project with an expected completion date of the IGCC facility in late 2011.
Alter NRG is also reducing project development expenditures on the Fox Creek coal-to-liquids project which is expected to produce up to 40,000 barrels per day of diesel fuel and naphtha from Alter NRG's existing coal reserves. The Company expects to spend less than $3 million in 2008 and 2009. The Company will continue to advance engineering work to further define the project scope, advance government grant applications and continue to seek strategic partners. The delayed timeline will impact the final completion of the development until late 2015, subject to successful partner selection by the end of 2009.
Alter NRG is pursuing alternative energy solutions to meet the growing demand for environmentally responsible energy in world markets. The Company's vision is to become a leader in the development of innovative gasification projects for the commercial production of energy. The Company's objective for the next decade is to utilize our commercially proven plasma gasification technology to become a senior energy producer of hydrogen, syngas, and transportation fuels (diesel, naphtha, ethanol, etc.), steam and electricity, all of which are fundamental products for the world's growing energy needs.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.
Advisory Respecting Forward-Looking Statements:
This news release contains certain forward-looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "objective", "ongoing", "may", "will", "project", "should", "believe", "plans", "intends", "confident", "might" and similar expressions are intended to identify forward-looking information or statements. In particular, but without limiting the foregoing, this news release contains forward-looking information and statements pertaining to the following: currency exchange rate fluctuations; environmental risks; unanticipated reclamation expenses; ability to finance; risk of obtaining regulatory approvals; ability to find joint venture partners; engineering and design risk; fluctuation in commodity prices and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. Various assumptions were used in drawing the conclusions or making the projections contained in the forward-looking statements throughout this news release.
The forward-looking information and statements included in this news release are not guarantees of future performance and should not be unduly relied upon. Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties including but not limited to:, unexpected events during construction, and start-up; variations in feedstock grade,; delay or failure to receive board or government approvals; timing and availability of external financing on acceptable terms; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of commodities; failure of plant, equipment or processes to operate as anticipated; delays in the completion of development or construction activities, as well as those factors discussed in or referred to under the heading Risk Factors" in the Company's Annual Information Form dated July 8, 2008 available at www.sedar.com which could cause actual results to differ materially from those anticipated and described in the forward-looking statements. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements.
The Company cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. The forward-looking information and statements contained in this news release speak only as of the date of this news release, and the Company assumes no obligation to publicly update or revise them to reflect new events or circumstances, except as may be required pursuant to applicable securities laws.