TIDMPRES
RNS Number : 8952J
Pressure Technologies PLC
10 December 2018
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY
THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER
THE EU MARKET ABUSE REGULATION (596/2014). UPON THE PUBLICATION OF
THE ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
10 December 2018
Pressure Technologies plc
("Pressure Technologies" or the "Group")
Proposed sale of Greenlane Biogas
Pressure Technologies plc (AIM: PRES), the specialist
engineering group is pleased to announce that it has today entered
into a binding letter of intent ("LOI") with Creation Capital Corp
(TSX-V: CRN.P) ("Creation Capital") a capital pool company listed
on the TSX Venture Exchange ("TSX-V") to sell its wholly-owned
subsidiary, PT Biogas Holdings Limited ("Greenlane"), which is the
holding company for the Group's Alternative Energy Division which
trades under the name Greenlane Biogas ("the AE Division") for a
total consideration of GBP11.1 million (the "Sale").
Commenting on the Sale, Chris Walters, Chief Executive of
Pressure Technologies, said:
"The global outlook for renewable natural gas (RNG) has improved
again throughout the year with governments and energy majors
increasing their commitment to renewables in the global energy mix,
with RNG playing a significant role, particularly in the US and
Europe.
"In June 2018, due to its significant potential, we announced
that strategic options would be evaluated for our AE Division that
would increase market opportunities and help unlock shareholder
value. Our strategic option review also considered refocusing the
Group on core specialist manufacturing activities in the defence
and oil and gas markets.
"As a result of this strategic review and following the
appraisal of outright sale and merger options, we have commenced a
process to spin out Greenlane and list it on the TSX Venture
Exchange, which will be accomplished by selling it to Creation
Capital. We will remain a supportive minority shareholder and
anticipate retaining our holding for the medium term."
Information on Creation Capital
Creation Capital joined TSX-V on 29 October 2018 with the aim of
acquiring a business in the energy sector. The chairman of Creation
Capital is Wade Nesmith, a lawyer who as a senior partner,
specialised in securities law with Lang Michener LLP (now McMillan
LLP) (1993 - 1998). He was the founder of Primero Mining Corp
("Primero). He served in the capacity of director of the Company
from October, 2008 to May, 2018 when Primero was acquired by First
Majestic Silver Corp. He was a founding director of Westport Fuel
Systems Inc. and from 1998 to 2003 he worked for Westport, helping
to lead their public markets activities and retiring as President,
Westport Europe. He was also a founding director of Wheaton
Precious Metals Corp. (formerly Silver Wheaton Corp.) (TSX, NYSE),
serving from 2004 to 2016. Mr. Nesmith is also currently a director
Westport Fuel Systems Inc. and was appointed to its board in June,
2017.
Creation Capital intends to raise C$12.0 million by way of a
private placement ("Private Placement") in order to, inter alia,
fund the purchase of Greenlane and to fund its ongoing working
capital requirements.
Trading in the common shares of Creation Capital will be
suspended on TSX-V with effect from today, 10 December 2018 and are
expected to remain halted until the completion of the acquisition
of Greenlane and the Private Placement, which is expected in late
January 2019 ("Completion").
Summary of the Sale
The consideration for the Sale is as follows:
-- GBP5.0 million payable in cash on Completion;
-- GBP2.0 million payable in common shares of Creation Capital
on Completion, to be issued at a price per share equal to the
Private Placement price; and
-- GBP4.1 million by way of a promissory note (the "Promissory
Note") to be issued by Creation Capital to Pressure Technologies on
Completion. The Promissory Note will (i) be denominated 50 per
cent. in pounds sterling and 50 percent in Canadian dollars; (ii)
mature 24 months from Completion; and (iii) bear interest at the
rate of 7% per annum.
A Pressure Technologies nominee will be appointed as an observer
of all Creation Capital board meetings and activities until such
time as the Promissory Note, together with all accrued and unpaid
interest, is paid in full and retired.
Benefits of the Sale
The cash to be received by the Group on Completion will be used
to pay down the Group's debt and the strengthened balance sheet
will enable the Group to focus investment on its core specialist
engineering businesses. As at 31 March 2018, the Group's net debt
was GBP9.3 million.
Background to the Sale
As set out in the Group's Interim Report, announced on 12 June
2018, the Board stated that it was considering a number of
strategic options to realise the potential in the AE Division and
unlock better value for shareholders.
Greenlane is a world leader in technology used to upgrade biogas
generated from landfills, waste water treatment plants, and
agricultural and food waste into a clean and marketable renewable
natural gas product. Greenlane has been in operation for over 30
years and has supplied over 100 biogas upgrading units in 18
countries worldwide, including the first upgrading systems in 11
countries and the world's first and second largest biogas upgrading
facilities in Germany and Canada. Greenlane designs and supplies
the equipment used to upgrade biogas produced by the anaerobic
digestion of organic waste to a high-quality methane product
suitable for either injection into the natural gas grid or direct
use as vehicle fuel. Greenlane, headquartered in Vancouver, British
Columbia, is the operating entity of the AE Division of Pressure
Technologies.
For the full year ended 30 September 2017, the AE Division had
revenue of GBP15.8 million and was breakeven at the operating
profit level. In the six months to 31 March 2018, it had revenue of
GBP2.8 million and an operating loss of GBP0.8 million. Net assets
at 30 September 2017 were GBP14.7 million.
Further Details of the Sale
The Sale constitutes a substantial transaction for Pressure
Technologies for the purposes of Rule 12 of the AIM Rules.
The Promissory Note will be secured by all of the assets of
Greenlane including a pledge of the shares of Greenlane. The
payment of the principal together with any and all accrued but
unpaid interest on the Promissory Note will be made by way of
balloon payment on maturity unless repaid earlier by Creation
Capital.
The completion of the Sale remains subject to a number of terms
and conditions, including, among other things:
-- Completion of the Private Placement;
-- Creation Capital obtaining all necessary consents, orders and
regulatory approvals, including the conditional approval of the TSX
Venture Exchange;
-- no material adverse changes occurring in of either Creation Capital or Greenlane;
-- completion of customary due diligence; and
-- other standard conditions of closing for a transaction in the nature of the Sale.
As part of the review of strategic options, the Group engaged
Creation Partners LLP ("Creation Partners") to provide strategic
advice relating to a potential divestiture of the AE Division.
Creation Partners is a limited liability partnership that is
controlled by Wade Nesmith, David Demers and David Blaiklock, each
of whom is a director of Creation Capital. An advisory fee of no
more than 4% of the consideration will be paid to Creation Partners
from the Group's share consideration, 50% of which will be received
by Creation Partners upon Completion and 50% of which will be
deposited in escrow and received by Creation Partners upon
repayment of the Promissory Note.
Full year results
The Group will announce its full year results for the year ended
29 September 2018 on Tuesday 11 December 2018.
For further information, please contact:
Pressure Technologies plc Tel: 0114 257 3622
Chris Walters, Chief Executive www.pressuretechnologies.com
Joanna Allen, Chief Financial
Officer
Keeley Clarke, Investor Relations
Cantor Fitzgerald Europe (Nominated Tel: 020 7894 7000
Adviser and Broker)
Philip Davies / Will Goode
------------------------------
Tavistock Tel: 020 7920 3150
Simon Hudson
------------------------------
COMPANY DESCRIPTION
Company description - www.pressuretechnologies.com
With its head office in Sheffield, Pressure Technologies was
founded on its leading market position as a designer and
manufacturer of high-pressure components and systems serving the
global energy, defence and industrial gases markets. Today it
continues to serve those markets from a broader engineering base
with specialist precision engineering businesses and has a
worldwide presence in Alternative Energy as a global leader in
biogas upgrading.
Pressure Technologies has three divisions, Precision Machined
Components, Cylinders and Alternative Energy, serving four main
markets: oil and gas, defence, industrial gases and alternative
energy.
Precision Machined Components - www.pt-pmc.com
-- Al-Met, Mid Glamorgan, acquired in 2010 www.almet.co.uk
-- Roota Engineering, Rotherham, acquired in March 2014 www.roota.co.uk
-- Quadscot, Glasgow, acquired in October 2014 www.quadscot.co.uk
-- Martract Limited, Barton-on-Humber, acquired in December 2016 www.martract.co.uk
Cylinders
-- Chesterfield Special Cylinders, Sheffield, IPO cornerstone in
2007 and includes, CSC Deutschland Gmbh, which is based in Dorsten,
Germany and Chesterfield Special Cylinders Inc. which is based in
Houston, USA www.chesterfieldcylinders.com
Alternative Energy
-- Greenlane Biogas, Vancouver, Canada and Sheffield, UK;
acquired in October 2014 www.greenlanebiogas.com
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END
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