TIDMKIBO
RNS Number : 8511X
Kibo Energy PLC
15 August 2018
Kibo Energy PLC (Incorporated in Ireland)
(Registration Number: 451931)
(External registration number: 2011/007371/10)
Share code on the JSE Limited: KBO
Share code on the AIM: KIBO
ISIN: IE00B97C0C31
("Kibo" or "the Company")
Dated: 15 August 2018
Kibo Energy PLC ('Kibo' or the 'Company')
Kibo to Acquire 60% Interest in UK Power Project Development
Company
Kibo Energy PLC ("Kibo" or the "Company"), the multi-asset,
Africa focused, energy company, is pleased to announce that it has
signed a Memorandum of Understanding ("MOU") for the acquisition
("the Acquisition") of a 60% equity interest in Mast Energy
Developments ("MED"), a private UK registered company targeting the
development and operation of flexible power plants to service the
Reserve Power generation market. Under the terms of the MOU, the
Company can acquire a 60% shareholding in MED for a consideration
of GBP300,000 payable to existing MED shareholders ("the Sellers")
in new Kibo shares and a share of future project revenue royalties,
which will be reinvested in the Company in the short term to an
amount of GBP 2.2 million. The full summary terms of the MOU are
described further under the Key Terms section below.
MED's business strategy is to acquire and develop a portfolio of
small scale power generation assets. Various "shovel ready" sites
have already been identified in the UK, capable of sustaining gas
fired power generators and ancillary structures from 20MW upwards.
They have full planning permission and permitting in place, long
term lease agreements, grid & gas connection offers and
positive feasibility studies, pertaining to technical and
commercial viability.
Kibo's initial review of MED's business plan indicates that its
first asset under acquisition in the UK described above can be up
and running within 12 months, thus potentially providing revenue
streams to Kibo in the short term. Similar lead time periods from
site acquisition to generator installation and power generation are
indicated for other projects of similar size in the UK. Financial
modelling indicates projected IRRs of 13-16% and NPVs of GBP 16 -19
million for the initial assets described above. MED is exploiting a
growth niche market in the UK for small scale Reserve Power
generation to balance out the national grid at critical times.
In conjunction with the potential financial benefits for Kibo
from the transaction, particularly the prospect of near term
revenue generation, it is envisaged that both parties will be able
to utilise their knowledge and expertise of the power industry to
assist in the development of further energy projects both in the UK
and Africa. Kibo's established portfolio of assets in southern
Africa is focused on large scale energy projects and with the
addition of MED's product offering, the Company will also be able
to access and exploit a different, very lucrative sector of the
African power market.
The Acquisition is subject to the completion of a comprehensive
due diligence by Kibo on MED and all relevant/applicable regulatory
and statutory approvals.
Key Terms of Proposed Acquisition:
-- Kibo to acquire 60% interest in MED for the following consideration:
o GBP300,000 payable in new Kibo shares to the Sellers at an
issue price which is the higher of GBP 0.0525 per share or the
volume weighted average price at which the shares of Kibo shall
have traded on AIM for 30 days immediately preceding the Completion
Date;
o Concurrent with the commencement of revenue generation from
each small-scale power project that MED may develop, Kibo shall pay
MED 5% of its share of gross revenues from each project (less gas
and trading costs) to the Sellers on a monthly basis ("the
Royalties"). The Sellers will immediately use the Royalties'
proceeds to subscribe for new Kibo shares pro rata to their
shareholding in MED until the Sellers shall collectively have
subscribed for new Kibo shares with an aggregate issue price of GBP
2.2 million. The issue price in respect of each monthly issue of
new Kibo shares will be the higher of GBP0.0525 or the volume
Weighted Average Price ("VWAP") at which the shares of Kibo shall
have traded 30 days immediately preceding the date of issue of the
shares;
o Following the subscription by the Sellers for Kibo shares with
an aggregate issue price of GBP 2.2 million from their
Royalties:
-- Kibo will continue to pay the Royalties to the Sellers
through deductions from its revenue streams from its interest in
the individual projects SPVs; and
-- Kibo shall have the option to acquire the Royalties from the
Sellers for a consideration equal to the then present value of the
Royalties at a 6% discount rate provided this right is exercised
within a 30-day notice period from when the generating asset
portfolio reaches 100 MW of operating capacity. In the event that
this option is not exercised, Kibo will have further options to
acquire the Royalties when the portfolio generating capacity
reaches 150MW, 200MW, 250MW and 300MW. In each case the terms of
the option will remain the same save that the option period will be
extended to 60 days from when the operating capacity reach each of
the four capacity milestones noted.
-- Kibo and the Sellers shall grant each other the option to
acquire (in the case of Kibo) or sell (in the case of MED) the
remaining 40% of MED that Kibo does not hold within 60 days from
when the generating asset portfolio reaches 150 MW at the market
value of the 40% at that time. In the case of acquisition by Kibo,
the consideration to the Sellers shall be in either in cash, new
Kibo shares or a combination of both. If Kibo elects to settle
fully or in part in new Kibo shares, the issue price shall be
calculated as the VWAP at which Kibo shares have traded on AIM for
the 30 days immediately preceding the issue of the shares. If the
option is not exercised by either party, the parties shall have a
further option to exercise when the portfolio generating capacity
reaches 250 MW and 300 MW. In each case the terms of the option
will remain the same save that the option period will be extended
to 90 days from when the operating capacity reaches each of the two
milestones noted;
-- Kibo and the Sellers shall enter into a Shareholders'
Agreement that shall govern the operation of MED; and
-- Kibo shall have the right to appoint two non-executive and
two executive directors to the MED Board while the Sellers shall
have the right to appoint 2 executive directors and 1 non-executive
director.
Louis Coetzee, CEO of Kibo Energy, said: "This proposed
acquisition provides Kibo with exposure to near -term revenue
generating assets and enables us to combine our knowledge of the
power generation market both in mature and emerging markets. There
is a distinct short-term revenue generating potential in the UK,
which is positive for Kibo and importantly all early stage
royalties payable to the sellers will be reinvested in Kibo. This
prospect of receipt of gradually increasing revenue streams in the
short term as MED builds generating capacity and the re-investment
of royalties in the early stages of production will greatly assist
the Company's working capital requirements as it develops its
rapidly expanding larger scale energy asset portfolio in Africa.
Additionally, it creates a situation where we can expand our
product offering and increase our exposure to different sectors of
the African energy market."
Darrel Krowitz, CEO of MAST Energy said "This acquisition not
only provides an opportunity for MED to augment the Kibo Energy
portfolio with small scale power solutions for industry and
national grid stability, in southern Africa, but allows it to
diversify into the UK's flexible power markets which we believe
will add short and long-term value to Kibo shareholders. I look
forward to working closely with the Kibo team as we execute our
project development strategy."
**S**
For further information please visit www.kibomining.com or
contact:
Louis Coetzee info@kibomining.com Kibo Energy PLC Chief Executive Officer
Andreas Lianos +27 (0) 83 4408365 River Group Corporate and Designated
Adviser on JSE
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Ben Tadd / +44 (0) 20 3700 0093 SVS Securities Limited Joint Broker
Tom Curran
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Jon Belliss +44 (0) 20 7399 9400 Novum Securities Joint Broker
Ltd
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Andrew Thomson +61 8 9480 2500 RFC Ambrian Limited NOMAD on AIM
--------------------- ----------------------- -------------------------
Isabel de Salis +44 (0) 20 7236 1177 St Brides Partners Investor and Media
/ Priit Piip Ltd Relations Adviser
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Notes to editors
Kibo Energy PLC is a multi-asset, Africa focussed, energy
company positioned to address the acute power deficit, which is one
of the primary impediments to economic development in Sub-Saharan
Africa. To this end, it is the Company's objective to become a
leading independent power producer in the region.
Kibo is simultaneously developing three similar coal-fuelled
power projects: the Mbeya Coal to Power Project ('MCPP') in
Tanzania; the Mabesekwa Coal Independent Power Project ('MCIPP') in
Botswana; and the Benga Independent Power Project ('BIPP') in
Mozambique. By developing these projects in parallel, the Company
intends to leverage considerable economies of scale and timing in
respect of strategic partnerships, procurement, equipment, human
capital, execution capability / capacity and project finance.
Additionally, the Company will benefit from its robust and
experienced international blue-chip partnership network across its
project portfolio, which includes: SEPCO III (China), General
Electric (USA); Tractebel Engineering (Belgium); Minxcon Consulting
(South Africa); ABSA / Barclays Africa; and Hogan Lovells
International LLP.
Johannesburg
15 August 2018
Corporate and Designated Adviser
River Group
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END
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