Aim- and JSE- listed independent power plant developer Ipsa has entered into an agreement with RAB Energy Fund and other investors to secure interim funding of £650 000, to be used for the development of its Elitheni coal project, in South Africa.

In terms of the agreement, Ipsa would issue £650 000 of unsecured loan notes of £1 each to RAB and the other investors.

The loan would be repayable by January 31, 2011 or earlier, if a change was made in the control of the company, if two of the Siemens Westinghouse 701 DU turbines were sold, or if some plant or equipment in South Africa to the value of $8-million was sold.

Ipsa has been facing financial challenges since early in 2009, as it has continued struggling to sell the four turbines that it had once earmarked for its proposed 521-MW Coega open-cycle gas turbine project, in the Eastern Cape.

In December, the power plant developer announced that it had signed a conditional sale agreement with Independent Power Corporation (IPC), which was also controlled by Ipsa CEO Peter Earl.

IPC planned to buy the turbine for $30-million and to use it at a gas-fired power plant it intended to build in Bolivia.

The construction of the Bolivian plant and the acquisition of the turbine were, however, still dependent on IPC securing the appropriate funding and government approvals in Bolivia.

Meanwhile, Ipsa has now also entered into an agreement with Standard Bank and TurboCare, its two largest creditors, for the marketing of the remaining three turbines.

This, it noted, would provide a standstill arrangement for the debt owed by Ipsa to these two creditors, which had agreed to not institute proceedings to recover the debts against Ipsa.

By September last year, Ipsa had warned that it would be unable to repay a £15,8-million loan to Standard Bank until it could sell one of the turbines.

This agreement would also terminate on January 31 next year, or earlier, if the creditors were repaid the owed debts or by November 30, this year, if TurboCare was unable to secure a sale.

NEWCASTLE PLANT

Meanwhile, Ipsa said that its subsidiary, Newcastle Cogeneration (NewCogen), has to come to an agreement with Sasol Gas for a new gas contract, as well as settle overdue amounts of about £3-million claimed by Sasol in respect of gas consumption and take-or-pay liabilities, before it restart its Newcastle plant.

NewCogen was planning to “substantially refinance” its 18-MW power plant, as soon as a power purchase agreement could be signed with Eskom.