Transaction Highlights
- Atlantis has conditionally agreed to acquire SIMEC Green Highland Renewables ("SIMEC GHR") at an agreed enterprise value of £124.7 million from the SIMEC group, part of the GFG Alliance.
- Agreed enterprise value of £124.7 million which reflects that SIMEC GHR will be acquired with up to £95 million of long-term project financing already in place on terms satisfactory to Atlantis. In addition, GHR will benefit from a c.£24 million capex facility to fund all planned future capex needs as well as a c. £2 million revolving credit facility.
- Taking into account the long-term project financing of up to £95 million, it is expected that at Completion of the Acquisition a maximum amount of £29.7 million will be paid for SIMEC GHR comprising: (i) a cash amount of £14.85 million for the shares of SIMEC GHR and the partial repayment of existing SIMEC GHR debt; and (ii) in the event that such repayment is to be funded by an equity fundraising, Atlantis will issue such number of Ordinary Shares so that the SIMEC group will, following Completion of the Acquisition, continue to own approximately 49.99 per cent. of the Company's issued Ordinary Share capital (such equity value not to exceed £14.85 million), thus resulting in an agreed enterprise value of £124.7 million.
- SIMEC GHR has developed a portfolio of operational, cash generating, hydro-electric assets benefitting from long-term renewable energy support. The portfolio has a total operational capacity of c.20MW, producing c.87GWh p.a. All projects within the portfolio benefit from 20 year fixed price feed-in-tariff ("FiT") payments from commercial operations date ("COD") which are indexed annually to the Retail Price Index.
- In addition, there is one project under construction and one project in development (which will, together, increase capacity by c.8MW).
- On Completion, the Acquisition is expected to be both immediately earnings and cash flow accretive to Atlantis with strong revenue growth expected between 2019 and 2021.
- Completion of the Acquisition is subject to the fulfilment of a number of conditions precedent, including the completion by Atlantis of its due diligence on SIMEC GHR. The Board expects the Acquisition to complete in Q1 2019.
Atlantis is pleased to announce today (Nov 23) that it has reached agreement to conditionally acquire SIMEC GHR. The Acquisition represents a further step towards the transformation of Atlantis into a diversified energy company of scale owning a broad spectrum of sustainable energy assets.
SIMEC GHR has developed an attractive portfolio of operational, cash generating, hydro-electric assets benefitting from long-term renewable energy support. The portfolio consists of 11 operational projects encompassing 15 schemes with a combined capacity of c.20MW (attributable to both SIMEC GHR and third party interests), one project under construction of c.2MW and one project at the development stage (comprising three schemes) of c.5.9MW. Of the total capacity, including the assets under construction and development, SIMEC GHR has an interest in c.24.9MW of capacity, with the balance being attributable to third party interests under joint ventures in relation to three projects.
The Company, through its wholly owned subsidiary, Atlantis Projects Pte. Ltd (the "Buyer") has signed a conditional Sale and Purchase Agreement to effect the Acquisition and pursuant to which it has conditionally agreed to acquire SIMEC GHR by way of the purchase of the entire issued share capital of SIMEC GHR Acquisitions MidCo Limited. The counterparty to the Sale and Purchase Agreement from which the Buyer is proposing to acquire SIMEC GHR is SIMEC GHR Acquisitions TopCo Limited (the "Seller"), a member of the GFG Alliance and an associate of the Company's largest Shareholder, SIMEC UK Energy Holdings Limited ("SIMEC"). The Acquisition follows the Company's acquisition of SIMEC Uskmouth Power Limited ("SUP") from SIMEC earlier this year and illustrates the benefits and inherent value to the Company of its access to the GFG Alliance's pipeline of renewable power assets.
The agreed enterprise value attributed to SIMEC GHR is £124.7 million which reflects that SIMEC GHR will be acquired with up to £95 million of long-term project financing in place on terms satisfactory to Atlantis, comprising (subject to the agreement of documentation) two new term loans. GHR is also expected to benefit from a c.£24 million capex facility as well as a c.£2 million revolving credit facility, neither of which will be drawn down at Completion of the Acquisition. Taking into account the long-term project financing of up to £95 million, it is expected that the Buyer will pay £29.7 million to the Seller for SIMEC GHR comprising: (i) a cash amount of £14.85 million for the shares of SIMEC GHR and the partial repayment of existing SIMEC GHR debt; and (ii) in the event that such repayment is funded by an equity fundraising, Atlantis will issue such number of Ordinary Shares so that SIMEC will (at the Seller's direction), following Completion of the Acquisition, continue to own approximately 49.99 per cent. of the Company's issued Ordinary Share capital (such equity value not to exceed £14.85 million), thus resulting in an agreed enterprise value of £124.7 million.
The proposed Acquisition is classified as a related party transaction under the AIM Rules for Companies since it involves a transaction with a related party of the Company, the Seller which is an associate of SIMEC, a substantial shareholder of the Company (the substantial shareholder being the Company's largest Shareholder (which, as at the date of this announcement, owns approximately 49.99 per cent. of the Company's issued Ordinary Share capital)). Accordingly, the Independent Directors of Atlantis (comprising John Neill (Non-Executive Chairman), Tim Cornelius (Chief Executive Officer), Andrew Dagley (Chief Financial Officer), John Woodley (Non-Executive Director) and Ian MacDonald (Non-Executive Director)), having consulted the Company's Nominated Adviser, Cantor Fitzgerald Europe, consider that the terms of the proposed Acquisition are fair and reasonable insofar as the Company's Shareholders are concerned.
Shareholders should be aware that, whilst a binding Share Purchase Agreement has been executed, the Acquisition is conditional and Completion of the Acquisition is subject to the fulfilment of a number of conditions precedent, including the completion by Atlantis of its due diligence. In addition, further transaction documentation in respect of the Acquisition is required to be agreed between the Buyer and the Seller and Completion of the Acquisition will be subject to, inter alia, the agreement and execution of those transaction documents. Accordingly, there can be no certainty that all of the terms of the transaction documents will be concluded to the satisfaction of the Buyer or the Seller, or that all of the conditions precedent will be fulfilled and that Completion will take place. If the Acquisition is not going to proceed for any reason or the Share Purchase Agreement is terminated, Atlantis will make an announcement through a Regulatory Information Service at the relevant time. The Company also intends to make further announcements in relation to the Acquisition through a Regulatory Information Service at appropriate times.
Tim Cornelius, CEO of SIMEC Atlantis Energy commented: "This proposed acquisition is one of the most exciting developments in the recent history of Atlantis. The management team at SIMEC GHR are world renowned for their mini-hydro development, construction, operations and maintenance capabilities. They have built a unique portfolio of operating assets in the UK that cannot be replicated due to recent changes in legislation. Not only will this acquisition have a positive cash flow positive impact on our group in the first year and deliver generation diversification, it validates the Atlantis relationship with our strategic shareholder, SIMEC, and it gives us access to one of the most accomplished and respected hydro development teams in the UK. Our combined goal is to now support the SIMEC GHR management to continue to replicate this success in other jurisdictions worldwide where we believe we can deliver superior risk-adjusted returns for our shareholders. This is yet another material step towards establishing Atlantis as a leading independent power generator in the UK."
Stephen Hutt, Managing Director of SIMEC Green Highland Renewables commented: "We are delighted that Atlantis has made the decision to acquire SIMEC GHR and we look forward to working with management to build on our previous success and to diversify our development pipeline into new geographical locations. The team at Atlantis has a long history of working on greenfield development projects in Scotland and we look forward to exploiting the many synergies that exist between our development and O&M teams and the wider Atlantis portfolio of projects. This is an exciting day for our team and we are delighted to be playing an important part in the Atlantis growth story."
Enquiries:
SIMEC Atlantis Energy Limited Via FTI Consulting
Tim Cornelius, Chief Executive Officer
Andrew Dagley, Chief Financial Officer
FTI Consulting +44 (0) 20 3727 1000
(PR Adviser to the Company)
Ben Brewerton
Alex Beagley
James Styles
Molly Stewart
Evercore Partners International LLP +44 (0) 20 7653 6000
(Financial Adviser to the Company)
Marcus Thompson
John Mason
Cantor Fitzgerald Europe +44 (0) 20 7894 7000
(Nominated Adviser and Broker to the Company)
Rick Thompson
Richard Salmond
David Porter
Notes to Editors
SIMEC Atlantis Energy
Atlantis is the global developer, owner and operator of sustainable energy projects with a diverse portfolio of more than 1,000MW in various stages of development. This includes a 77% stake in the world's largest tidal stream power project, MeyGen, and the conversion of the 220MW Uskmouth Power Station.
In 2017 Atlantis entered into a strategic partnership with SIMEC, a member of the GFG Alliance, to convert the Uskmouth Power Station to use an end-of-waste energy pellet as fuel. The plant is expected to enter commercial operations in 2020 and will sell its power to GFG Alliance companies under two 20-year power purchase agreements. A successful conversion will tackle the pressing issue of non-recyclable waste in the UK and will form the blue-print for other large-scale conversion projects across the globe.
This Acquisition follows the Company's entry into a strategic partnership with SIMEC and is a further step towards the transformation of Atlantis into a diversified energy company of scale, owning development and generating assets across the sustainable energy spectrum in Europe, Asia and Australia, complementing our existing UK pipeline.
https://www.simecatlantis.com/
Market Abuse Regulation
The information contained within this announcement is inside information as stipulated under MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain. The person responsible for arranging for the release of this announcement on behalf of SIMEC Atlantis Energy is Tim Cornelius, Chief Executive Officer of SIMEC Atlantis Energy.
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