CCS continues to work to monetize and initiate continuous operation of additional RC facilities, some of which are being delayed as several existing and potential RC investors are waiting for information from the IRS on clarification of the process for issuance of PLRs and potential recommended structures for tax-financing partnerships. ADA hoped that the IRS would provide this information before year-end, but it is now expected in early 2013.Today ADA-ES filed a Current Report on 8-K with the Securities and Exchange Commission (SEC) regarding amendments to the leases between CCS and an affiliate of Goldman Sachs (“Goldman”) for the two longest operating RC facilities. The original agreements signed in 2010 had an initial term of two and a half years with automatic one year extensions for the remaining seven years of Section 45 tax eligibility. Given the delay in the expected IRS information, CCS and Goldman have agreed to change the lease term to month-to-month. ADA expects that the amended leases will benefit the JV’s short-term cash flow as a significant portion of the lease payments will be made monthly rather than quarterly. Revenues under these leases will have a greater cash component as the $9 million in pre-paid rent paid in 2010 is now fully amortized. The Form 8-K also describes a deferment of the return of $4.7 million in deposits to an affiliate of Goldman until April 30, 2013. This provides more time for the affiliate to pursue leases on additional RC facilities owned by CCS for which they have indicated an interest in leasing up to a total of 18 to 20 million tons of RC per year. ADA and CCS continue to make progress with ADA’s newest RC technology, M-45-PC™. Following a technological breakthrough in the fourth quarter of 2012, M-45-PC™ has achieved qualifying emissions for pulverized coal (PC) boilers. This greatly expands the market for the remaining RC facilities to include many larger power plants. Twelve RC facilities that have not been committed for use on other power plants could potentially now be converted for use of the M-45-PC™ technology. The use of M-45 PC™ technology would allow these facilities to operate at their full capacity and each produce 5 to 10 tons of RC per year. The Company has received very favorable feedback from the initial marketing of this product, and we expect that the initial facilities using M-45-PC™could be operating as early as the end of the second quarter of 2013.
Finally, the Company is pleased to announce that Mr. Graham Mattison has joined the ADA management team as Vice President of Investor Relations. Mr. Mattison had previously followed ADA as a Senior Vice President and equity research analyst at Lazard Capital Markets. Having actively covered ADA for more than five years, Mr. Mattison brings an in-depth understanding of ADA’s multiple businesses, technologies and opportunities. We look forward to Mr. Mattison working to expand ADA’s investor relations efforts and help communicate the significant opportunities ahead for the Company.Dr. Michael Durham, President and CEO of ADA, stated, “We are frustrated with the externalities that have slowed our RC business for the past 6 months. However, these delays have created the potential for significant upside for the RC business in that the final 12 uncommitted RC facilities are now available for installation on larger power plants utilizing our new M-45-PC™ technology for PC boilers.” About ADA ADA is a leader in clean coal technology and the associated specialty chemicals, serving the coal-fueled power plant industry. Our proprietary environmental technologies and specialty chemicals enable power plants to enhance existing air pollution control equipment, minimize mercury, CO 2 and other emissions, maximize capacity, and improve operating efficiencies, to meet the challenges of existing and pending emission control regulations. With respect to mercury emissions:
- Through our consolidated subsidiary, Clean Coal Solutions, LLC (“CCS”), we provide our patented Refined Coal (“RC”) CyClean™ technology to enhance combustion of and reduce emissions of NOx and mercury from coals in cyclone boilers and our patent pending M-45™ and M-45-PC™ technologies for Circulating Fluidized Boilers and Pulverized Coal boilers respectively.
- We supply Activated Carbon Injection (“ACI”) and Dry Sorbent Injection (“DSI”) systems, mercury measurement instrumentation, and related services.
- Under an exclusive development and licensing agreement with Arch Coal, we are developing and commercializing an enhanced PRB coal with reduced emissions of mercury and other metals.