Cindrigo Holdings (LSE:CINH), the AIM-listed sustainable energy developer with biomass operations in Finland and geothermal licences in Germany, has agreed to exchange its lease of the Kaipola energy plant for a lease and five-year option to buy the Heinola industrial estate.
The new site spans 32 hectares, including 20,000 square metres of industrial buildings and a 40MW combined heat and power plant, and will host both Cindrigo's energy operations and the planned Fuelwood wood pellet factory.
Chief executive Lars Guldstrand said the deal delivers an estimated 60% reduction in planned lease costs, with lease payments set at €32,000 per month for the entire site.
The Heinola plant can begin operations at a 10MW minimum burn, against the 40MW threshold required at Kaipola, allowing earlier and lower-volume profitability as Fuelwood scales up pellet production.
Cindrigo will write down £15.9m of goodwill attached to the Kaipola lease after concluding that commencement of production there was not feasible, alongside derecognising £2.25m of contingent consideration and £4.75m of lease liabilities.
The company expects to recognise a right-of-use asset of approximately €4m and a corresponding lease liability of €3.15m for the Heinola site, with the purchase option priced at €3m.
Cindrigo will issue 5.6m new shares at £0.15 each to CLF Wealth Management to settle an introduction fee tied to the transaction.
The Fuelwood joint venture's structure and its target of an initial 80,000 tonnes per annum of pellet production remain unchanged, with a further funding update expected once outstanding approvals conclude.
News Intelligence what this means for the company
Cindrigo swapped its Kaipola power plant lease for a larger Heinola industrial site with a 60% reduction in planned lease costs (€32,000/month vs. prior arrangement), but took a £15.9m goodwill write-down after concluding Kaipola production was not feasible. The new site's lower 10MW minimum burn threshold versus Kaipola's 40MW allows the company to reach profitability at lower volumes as its Fuelwood joint venture scales pellet production.
The lease restructuring materially improves unit economics and de-risks the path to cash generation by removing the high-volume threshold constraint, but the £15.9m goodwill impairment signals a prior strategic misstep and underscores execution risk in a capital-intensive, multi-jurisdiction business still awaiting funding and regulatory approvals.
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