Efficient boiler maker Flowgroup (FLOW) received a major endorsement this week when its energy supply business signed a five-year deal to buy wholesale gas and electricity on extended credit terms from Shell Energy Europe, part of Royal Dutch Shell (RDSA).
The deal, which follows an agreement with New York-listed Jabil to manufacture its micro-CHP boilers, is expected to immediately release £7m of restricted cash back to Flowgroup. The group and analysts say this will allow it to expand its energy customer base, which will soon be targeted as potential boiler customers. Working capital will also be used to support the imminent roll out of the boiler.
In exchange, Shell has been granted security over the business and assets of the energy division, and received a warrant to subscribe to shares in Flow Energy equivalent to 10 per cent of the division's growth in value.
