TIDMSAE
RNS Number : 3933I
SIMEC Atlantis Energy Limited
23 November 2018
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014 ("MAR").
THIS ANNOUNCEMENT, INCLUDING THE INFORMATION CONTAINED HEREIN,
IS RESTRICTED AND IS NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE,
DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO OR FROM THE
UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY
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JURISDICTION IN WHICH SUCH PUBLICATION, DISTRIBUTION OR RELEASE
WOULD BE PROHIBITED BY ANY APPLICABLE LAW.
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT
AND DOES NOT CONSTITUTE, CONTAIN OR FORM PART OF AN OFFER TO SELL
OR ISSUE OR A SOLICITATION TO BUY, SUBSCRIBE FOR OR OTHERWISE
ACQUIRE, ANY SECURITIES IN THE UNITED STATES, CANADA, AUSTRALIA,
JAPAN OR THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION IN
WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
23 November 2018
SIMEC Atlantis Energy Limited
("Atlantis" or the "Company")
Proposed Acquisition of SIMEC Green Highland Renewables
Transaction Highlights
-- Atlantis has conditionally agreed to acquire SIMEC Green
Highland Renewables ("SIMEC GHR") at an agreed enterprise value of
GBP124.7 million from the SIMEC group, part of the GFG
Alliance.
-- Agreed enterprise value of GBP124.7 million which reflects
that SIMEC GHR will be acquired with up to GBP95 million of
long-term project financing already in place on terms satisfactory
to Atlantis. In addition, GHR will benefit from a c.GBP24 million
capex facility to fund all planned future capex needs as well as a
c. GBP2 million revolving credit facility.
-- Taking into account the long-term project financing of up to
GBP95 million, it is expected that at Completion of the Acquisition
a maximum amount of GBP29.7 million will be paid for SIMEC GHR
comprising: (i) a cash amount of GBP14.85 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
GBP14.85 million), thus resulting in an agreed enterprise value of
GBP124.7 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 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 GBP124.7
million which reflects that SIMEC GHR will be acquired with up to
GBP95 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.GBP24 million capex facility as well as a c.GBP2 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 GBP95 million, it is expected that the
Buyer will pay GBP29.7 million to the Seller for SIMEC GHR
comprising: (i) a cash amount of GBP14.85 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 GBP14.85 million), thus resulting in an agreed
enterprise value of GBP124.7 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.
Important Notice
This announcement, including the information contained herein,
is restricted and is not for publication, distribution or release,
directly or indirectly, in whole or in part, in or into or from the
United States, (including its territories and possessions, any
States of the United States and the District of Columbia)
(collectively, the "United States"), Canada, Australia, Japan or
the Republic of South Africa or in or into or from any other
jurisdiction in which such publication, distribution or release
would be prohibited by any applicable law.
This announcement is for information purposes only and is not
and does not constitute, contain or form part of an offer to sell
or issue or a solicitation to buy, subscribe for or otherwise
acquire, any securities in the United States, Canada, Australia,
Japan or the Republic of South Africa or any other jurisdiction in
which any such offer or solicitation would be unlawful. The
securities referred to in this announcement have not been and will
not be registered under the US Securities Act of 1933, as amended
(the "US Securities Act"), or under any applicable securities laws
of any state or other jurisdiction of the United States, and may
not be offered, sold, resold or transferred or delivered, directly
or indirectly, in or into or from the United States absent
registration under the US Securities Act or except pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the US Securities Act and, in each
case, in compliance with any applicable securities laws of any
state or other jurisdiction of the United States. Any failure to
comply with these restrictions may constitute a violation of the
securities laws of such jurisdiction.
Certain statements in this announcement are forward-looking
statements which are based on the Company's expectations,
intentions and projections regarding its future performance,
anticipated events or trends and other matters that are not
historical facts. These forward-looking statements, which may use
words such as "aim", "anticipate", "believe", "could", "intend",
"estimate", "expect" and words of similar meaning, include all
matters that are not historical facts. These forward-looking
statements involve risks, assumptions and uncertainties that could
cause the actual results of operations, financial condition,
liquidity and dividend policy and the development of the industries
in which the Group will operate to differ materially from the
impression created by the forward-looking statements. These
statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties and other factors that
could cause actual results to differ materially from those
expressed or implied by such forward-looking statements. Given
those risks and uncertainties, prospective investors are cautioned
not to place undue reliance on forward-looking statements.
Forward-looking statements speak only as of the date of such
statements and, except as required by the Financial Conduct
Authority, the London Stock Exchange or applicable law, the Company
undertakes no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise.
No statement in this announcement is intended to be a profit
forecast and no statement in this announcement should be
interpreted to mean that earnings per share of the Company for the
current or future financial years would necessarily match or exceed
the historical published earnings per share of the Company.
Evercore Partners International LLP ("Evercore"), which is
authorised and regulated in the United Kingdom by the Financial
Conduct Authority, is acting as financial adviser exclusively to
the Company and no one else in connection with the matters
described in this announcement. Evercore will not regard any person
other than the Company (whether or not a recipient of this
announcement) as its client in relation to the matters described in
the announcement and will not be responsible to any person other
than the Company for providing the protections afforded to its
clients or for providing advice in respect of such matters to any
person other than the Company. Neither Evercore nor its affiliates
have authorised the contents of any part of this announcement and
neither accept liability for the accuracy of any information or
opinions contained in this announcement nor for the omission of any
material information from this announcement for which the Company
and the Directors are responsible. No representation or warranty,
express or implied, is made by Evercore or its affiliates as to any
of the contents of this announcement (without limiting the
statutory rights of any person to whom this announcement is
issued).
Cantor Fitzgerald Europe, which is authorised and regulated in
the United Kingdom by the Financial Conduct Authority, is acting
solely as nominated adviser and broker exclusively to the Company
and no one else in connection with the matters described in this
announcement. Cantor Fitzgerald Europe will not regard any person
other than the Company (whether or not a recipient of this
announcement) as its client in relation to the matters described in
this announcement and will not be responsible to any person other
than the Company for providing the protections afforded to its
clients or for providing advice in respect of such matters to any
person other than the Company. Neither Cantor Fitzgerald Europe nor
any of its affiliates or agents have authorised the contents of any
part of this announcement. Apart from the responsibilities and
liabilities, if any, which may be imposed on Cantor Fitzgerald
Europe by FSMA or the regulatory regime established thereunder,
Cantor Fitzgerald Europe and its affiliates and agents accept no
responsibility whatsoever, and makes no representation or warranty,
express or implied, as to the contents of this announcement
including its accuracy, completeness or verification or for any
other statement made or purported to be made by it, or on behalf of
it, the Company or any other person, in connection with the Company
and the contents of this announcement, whether as to the past or
the future. Cantor Fitzgerald Europe and its affiliates and agents
accordingly disclaim all and any liability whatsoever, whether
arising in tort, contract or otherwise (save as referred to above),
which it might otherwise have in respect of the contents of this
announcement or any such statement.
Neither the content of the Company's website (or any other
website) nor the content of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into, or forms part of, this announcement.
Regulated Information Classification: Inside information
1. INTRODUCTION
Atlantis is pleased to announce today that it has reached
agreement to conditionally acquire SIMEC GHR. SIMEC GHR has
developed an attractive portfolio of operational, cash generating,
hydro-electric assets benefitting from long-term renewable energy
support. 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.
The Company, through its wholly owned subsidiary, Atlantis
Projects Pte. Ltd as 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 as the Seller, a
member of the GFG Alliance and an associate of the Company's
largest Shareholder, SIMEC.
Further details of the Sale and Purchase Agreement is set out
below under the heading "Principal Terms of the Acquisition and
Documentation" in this announcement.
The agreed enterprise value attributed to SIMEC GHR is GBP124.7
million which reflects that SIMEC GHR will be acquired with up to
GBP95 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 GBP24 million capex facility as well as a GBP2 million
revolving credit facility, neither of which will be drawn down at
Completion. Taking into account the long-term project financing of
up to GBP95 million, it is expected that the Buyer will pay GBP29.7
million to the Seller for SIMEC GHR comprising: (i) a cash amount
of GBP14.85 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
GBP14.85 million), thus resulting in an agreed enterprise value of
GBP124.7 million.
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. Further details of
these conditions precedent are set out below under the heading
"Principal Terms of the Acquisition and Documentation" in this
announcement. 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 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.
The Acquisition, as a related party transaction of the Company,
is not subject to the approval of the Company's Shareholders and,
as at the date of this announcement, Shareholder approval in
respect of the Acquisition is not considered to be required. If as
a result of the Company deciding to carry out an equity fundraising
(or otherwise) Shareholder approval is subsequently determined as
being required for the Acquisition, the Company will make a further
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.
2. BACKGROUND TO AND REASONS FOR THE ACQUISITION
In June 2018, Atlantis completed the acquisition of SUP from
SIMEC which was intended to be the first of a number of
acquisitions to transform the Company into a diversified energy
company of scale. In connection with the acquisition of SUP, the
Company entered into a Relationship Agreement with SIMEC which,
amongst other things, provided Atlantis with investment rights
through a right of first offer to a pipeline of renewable power
assets owned or subsequently acquired by the GFG Alliance of which
both the Seller and SIMEC are members.
The Acquisition of SIMEC GHR would be the first acquisition by
Atlantis which illustrates the benefits and inherent value to the
Company of its access to the GFG Alliance's pipeline of renewable
power assets as was envisaged by the Relationship Agreement.
Specifically in the case of the Acquisition of SIMEC GHR, the
Company's access to that pipeline of assets has facilitated the
opportunity to acquire 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 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. All
projects receive fixed RPI-linked FiT payments for generation for a
period of 20 years from commissioning and, in addition, receive
revenues for the export of the generated electricity. Hydropower
assets of this type typically achieve a premium to the average
baseload wholesale electricity prices primarily because generation
from hydropower assets is highest in cold and wet conditions when
electricity demand is higher. The Company is proposing to acquire
the portfolio through its wholly owned subsidiary, Atlantis
Projects Pte. Ltd as the Buyer, by way of the purchase of the
entire issued share capital of SIMEC GHR Acquisitions MidCo Limited
from the Seller, which as stated above is a member of the GFG
Alliance and an associate of the Company's largest Shareholder,
SIMEC.
The Board of Atlantis believes that, if completed, the
Acquisition of SIMEC GHR will be an important milestone in the
development of the Company and provides it with the following key
benefits:
-- Immediate operating earnings and cash flow: SIMEC GHR is
expected to provide an immediate contribution to the Company of
earnings and cash flow generated by a sizeable operational
hydro-electric portfolio of assets;
-- Earnings accretion: on Completion, the Acquisition is
expected to be immediately earnings accretive to the Company;
-- Visible minimum contracted cash flows: SIMEC GHR provides
long-term visibility on earnings and cash flow generation, with
both being underpinned by attractive RPI-linked FiT payments for 20
years from the commissioning of each project;
-- Upside from wholesale power prices: SIMEC GHR has
historically benefited from upside linked to wholesale electricity
prices whilst also being protected by FiT payments which ensure a
minimum level of contracted earnings and cash flow;
-- Efficient project capital structure: SIMEC GHR is proposed to
be acquired with long-term project financing of up to GBP95 million
in place, comprising (subject to the agreement of documentation)
two new term loans. GHR is also expected to benefit from a GBP24
million capex facility as well as a GBP2 million revolving credit
facility, neither of which will be drawn down at Completion;
-- Experienced management: the Acquisition will allow the
Company to supplement its existing management expertise with the
addition of SIMEC GHR's highly regarded and experienced management
team;
-- In-house expertise: the Acquisition will enhance the existing
skill base within the Company. The Directors believe that SIMEC GHR
is a best-in-class operator of hydro-electric plants in the United
Kingdom which allows it to generate ancillary income through the
provision of operations and maintenance services to 30 third party
sites, and is also a leading developer of hydroelectric schemes in
the United Kingdom with its in-house team having successfully
consented 60 projects since its formation in 2007;
-- Platform for further growth: establishment of a leading
hydro-electric platform of scale providing opportunities for the
Company to pursue both organic growth and complementary bolt-on
acquisitions; and
-- Value of access to the GFG Alliance's pipeline of renewable
power assets and the support of SIMEC: the Acquisition illustrates
the benefits and inherent value to the Company of its access to the
GFG Alliance's pipeline of renewable power assets as was envisaged
by the Relationship Agreement. It also demonstrates the commitment
of SIMEC as the Company's largest Shareholder to supporting
Atlantis in its aim of establishing itself as a diversified energy
company of scale.
The Board of Atlantis believes that the Acquisition of SIMEC GHR
is fully aligned with the Company's strategy. It accelerates the
development of Atlantis and its aim to become a diversified energy
company of scale and, in the process, provides a clear
demonstration of the continued support that it receives from SIMEC
as its largest Shareholder.
3. BACKGROUND INFORMATION ON SIMEC GHR
SIMEC GHR is the largest independent hydro developer in the
United Kingdom. It has developed and operates a portfolio of
hydro-electric generation assets with a total capacity of c.27.9MW.
SIMEC GHR also provides asset management and operations and
maintenance services to its own projects, its joint venture
projects and hydro-electric projects owned by third parties.
Overview of the portfolio
The portfolio consists of 11 operating projects encompassing 15
schemes with a combined capacity of c.20MW (attributable to both
SIMEC GHR and third party interests), one asset under construction
of c.2MW and one asset 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.
In addition, SIMEC GHR has an option to acquire the remaining 50.25
per cent. stake in the 1.5MW Allt Garbh project that it does not
already own with such option being exercisable from 2 February 2019
until 1 October 2019. Exercise of this option would increase the
combined net capacity of the portfolio attributable to SIMEC GHR's
interest in the portfolio to 25.7MW.
The P50 weighted average load factor of the SIMEC GHR operating
assets is c.50 per cent., based on gross annual electricity
generation of c.87GWh, which consists of c.10GWh of P50 generation
attributable to third party interests under joint venture projects,
and net annual electricity generation attributable to SIMEC GHR's
interest in the portfolio of c.77GWh. Once the two projects under
construction or development are also operational, and assuming the
remaining 50.25 per cent. stake in the Allt Garbh joint venture
project which SIMEC GHR does not already own is acquired, the P50
weighted average load factor for the SIMEC GHR operating assets
reduces to c.47 per cent., based on gross annual electricity
generation of c.114GWh, which consists of c.8GWh of P50 generation
attributable to third party interests under joint venture projects,
and net annual electricity generation attributable to SIMEC GHR's
interest in the portfolio of c.106GWh.
An overview of the portfolio is set out in Table 1 below. The
assets are all located in the Scottish Highlands, in the Perth and
Kinross council regions.
Table 1
FiT (2018 p/kWh)
------------- ------------- ----------- ----------- ---------- ---------- ----------- -------------------------
Capacity Average
Gross SIMEC GHR net to Gross P50 load
Commissioning capacity ownership SIMEC GHR generation factor Generation Export
Asset year (MW) (%) (MW) (MWh) (%) tariff tariff
------------- ------------- ----------- ----------- ---------- ---------- ----------- ----------- ------------
Operating
Keltneyburn 2010 2.0(1) 100.0% 2.0 8,193(1) 47% 14.07 5.24
============= ============= =========== =========== ========== ========== =========== =========== ============
Roroyere 2011 0.8 100.0% 0.8 1,922 28% 14.07 5.24
============= ============= =========== =========== ========== ========== =========== =========== ============
Achnacarry 2015 0.7 0.4 2,198 34% 14.07 5.24
0.5 0.2 2,286 52% 18.00 5.24
1.2 49.7% 0.6 5,391 50% 14.07 5.24
============= ============= =========== =========== ========== ========== =========== =========== ============
Ceannacroc 2016 0.5 0.5 1,881 43% 15.39 5.24
2016 1.3 100.0% 1.3 4,350 40% 12.02 5.24
============= ============= =========== =========== ========== ========== =========== =========== ============
Allt
Mullardoch 2016 0.5 100.0% 0.5 1,743 40% 15.39 5.24
============= ============= =========== =========== ========== ========== =========== =========== ============
Allt Garbh 2017 1.5 49.8% 0.7 4,608 35% 10.69 5.24
============= ============= =========== =========== ========== ========== =========== =========== ============
Loch Eilde
Mor #1 2017 2.0 100.0% 2.0 17,222 98% 10.69 5.24
Loch Eilde
Mor #2 2018 3.0 100.0% 3.0 16,591 63% - -
============= ============= =========== =========== ========== ========== =========== =========== ============
Shenval 2017 0.5 100.0% 0.5 1,963 45% 13.68 5.24
============= ============= =========== =========== ========== ========== =========== =========== ============
Gleann Nam
Fiadh 2017 2.0 100.0% 2.0 7,474 43% 10.69 5.24
============= ============= =========== =========== ========== ========== =========== =========== ============
Coulags 2017 1.5 100.0% 1.5 4,969 39% 10.69 5.24
============= ============= =========== =========== ========== ========== =========== =========== ============
Coiltie 2017 2.0 50.0% 1.0 6,009 34% 10.69 5.24
Total
operating(2) 20.0 17.0 86,800 50%
Under
construction
Nathrach 2019e 2.0 100.0% 2.0 6,929 40% 6.48 5.24
In
development
Glen Kinglass 2020e 5.9 100.0% 5.9 20,160 39% - 5.24
Total 27.9 24.9 113,889 47%
(1) Includes impact of remedial work to allow scheme to operate
at 2MW (currently 1.8MW) and with 300 MWh
(2) Totals may not equal the sum of the above values due to
rounding
Portfolio development
Two of the SIMEC GHR assets (Roroyere and Keltneyburn) were
purchased by SIMEC GHR once operational. Development and
construction of all of the other assets was managed by SIMEC GHR's
in-house development and construction management teams. The
development team at SIMEC GHR has the in-house capability to take a
project from initial feasibility through environmental appraisal,
securing licences and financial modelling to final design, working
closely with local communities and other stakeholders throughout
the process. SIMEC GHR typically enters into fixed price contracts
with third-party civil engineering contractors to build each
project. SIMEC GHR has long-term and established relationships with
a number of leading civil engineering and electrical contractors.
The portfolio employs technology from four established turbine
manufacturers: Kössler, Gilkes, Newmills and Canyon.
Each project comprises a water intake system, a pressure
pipeline, a powerhouse with a turbine, generator and control
equipment, a tailrace and an outfall pipe (to return water from the
turbine to the watercourse), electrical and metering systems,
access tracks and monitoring and communication systems.
The Company intends to continue to develop and construct the
Nathrach and Glen Kinglass assets which are expected to be
commissioned in Q2 2019 and Q4 2020 respectively, and to be
connected to the grid for commercial operations in Q3 2019 and Q4
2021 respectively.
Offtake arrangements
The 11 operational SIMEC GHR projects are made up of 15 schemes,
of which 14 are accredited under the UK Government's FiT subsidy
regime which provides 20 years of subsidy support for each project
and an RPI linked minimum power price. Under the FiT regime,
accredited assets receive an individual, RPI-linked generation
tariff for all electricity produced. The projects are also eligible
to receive a 5.24p/kWh (real, 2018) RPI-linked export tariff for
all electricity exported to the grid. The projects can, on an
annual basis, elect either to receive the export tariff or to sell
their electricity independently via a power purchase agreement and
receive the prevailing wholesale power price, if higher. This means
that the export tariff effectively provides a guaranteed minimum
"floor" price to each project. All operating projects are currently
selling power to the grid under fixed-price power purchase
agreements. The Nathrach scheme, which is currently in
construction, is pre-accredited for the FiT and the same
pre-accreditation will be sought for the Glen Kinglass scheme once
the necessary conditions, including award of planning permission,
have been met.
The portfolio currently consists of 11 operational projects and
has limited exposure to any single asset or location. Mainly due to
the historical correlation between electricity generation across
the portfolio and periods of high electricity demand in the United
Kingdom (e.g. during periods of wetter and colder weather), the
portfolio has in the past sold power at a premium of c.15 per cent.
to the UK baseload power price.
Operations and maintenance capabilities
SIMEC GHR has an established operational team which undertakes
all operations and maintenance activities across the portfolio,
including scheduled maintenance, site maintenance, responding to
faults, corrective maintenance, monitoring and reporting. The scope
of the services is generally common to all schemes and includes
routine inspections of various components, removing debris from the
intake, greasing and maintenance works, abstraction monitoring and
environmental reporting.
SIMEC GHR also provides asset management and operations and
maintenance services to third-party projects. SIMEC GHR currently
has contracts with 30 third-party sites representing 21MW of
capacity. These contracts contributed revenue of c.GBP0.8 million
in 2017. Given the potential for the operations and maintenance
business to realise operating efficiencies by servicing more
densely located projects, SIMEC GHR management sees the addition of
further contracts as an attractive growth opportunity for SIMEC
GHR. SIMEC GHR management is in active discussions with
third-parties and is currently targeting the addition of a further
15 to 20 schemes over the medium term.
Further information about SIMEC GHR
SIMEC GHR is a Scottish company with its head office in Perth
and an operations and management office in Dingwall. It has been
developing hydro-electric schemes since 2007, from initial concept
through to consent, construction, commissioning and generation.
SIMEC GHR employs 21 people who provide in-house capabilities
across planning, development, civil, mechanical and electrical
engineering, as well as operations and maintenance. Since 2007,
SIMEC GHR has consented 60 projects with total capacity of
c.37MW.
4. FINANCIAL INFORMATION ON SIMEC GHR
Set out below is a summary of the consolidated financial results
for the SIMEC GHR group including the nine months to 30 June 2018
and the two preceding financial years ended 30 September 2017 and
30 September 2016, respectively. The accounts for SIMEC GHR are
prepared under UK GAAP. As SIMEC GHR has not historically prepared
consolidated accounts, the 2017 and 2016 figures below are provided
for the Seller, whose only investment is in SIMEC GHR.
9 months ended Year ended 30 September
30 June
2018 2017 2016
SIMEC GHR Seller Seller
(unaudited) (unaudited) (unaudited)
GBP'000 GBP'000 GBP'000
Revenue 6,609 5,744 4,821
Cost of sales (2,985) (2,338) (1,961)
Gross profit 3,623 3,406 2,860
--------------- ------------ ------------
Administrative expenses (958) (2,551) (4,478)
Exceptional administrative
expenses (707) (366) (357)
Other operating income 56 29 14
Operating profit/(loss) 2,013 518 (1,960)
Share of joint venture
profits 19 (96) (316)
Finance costs (3,524) (6,225) (6,764)
Taxation (153) (152) (1,770)
Net profit/(loss) for
the period (1,645) (5,955) (10,811)
=============== ============ ============
Total assets 51,615 53,752 42,683
--------------- ------------ ------------
Total liabilities 80,760 77,604 53,244
--------------- ------------ ------------
5. PRINCIPAL TERMS OF THE ACQUISITION AND DOCUMENTATION
Atlantis (through its wholly owned subsidiary, Atlantis Projects
Pte. Ltd as the Buyer) and SIMEC GHR Acquisitions TopCo Limited as
the Seller have signed a conditional Sale and Purchase Agreement to
effect the Acquisition of SIMEC GHR. Details of the Sale and
Purchase Agreement are set out below.
Pursuant to the Sale and Purchase Agreement, the Buyer has
conditionally agreed to acquire SIMEC GHR by way of the purchase of
the entire issued share capital of SIMEC GHR Acquisitions MidCo
Limited from the Seller, a member of the GFG Alliance and an
associate of the Company's largest Shareholder, SIMEC.
The agreed enterprise value attributed to SIMEC GHR is GBP124.7
million which reflects that SIMEC GHR will be acquired with up to
GBP95 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 GBP24 million capex facility as well as a GBP2 million
revolving credit facility, neither of which will be drawn down at
Completion. Taking into account the long-term project financing of
up to GBP95 million, it is expected that the Buyer will pay GBP29.7
million to the Seller for SIMEC GHR comprising: (i) a cash amount
of GBP14.85 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
GBP14.85 million), thus resulting in an agreed enterprise value of
GBP124.7 million. The Sale and Purchase Agreement also includes
certain adjustment mechanisms in respect of working capital and
indebtedness.
Pending Completion, the Seller has given a number of
undertakings to the Buyer to the effect that the business of SIMEC
GHR will be run in the ordinary course. The Seller has also given
the Buyer a number of warranties and indemnities that are broadly
customary for a transaction such as the Acquisition, subject to
certain customary limitations of liability. As a condition
precedent (and as also further referred to below), each of the
Buyer and the Seller have further agreed to negotiate with each
other in good faith with a view to settling the terms of any
transaction documentation required for the Acquisition.
The Sale and Purchase Agreement is conditional, inter alia, upon
the fulfilment of a number of conditions precedent including, but
not limited to, the following matters:
-- completion of due diligence satisfactory to Atlantis in respect of SIMEC GHR;
-- the agreement and execution of a number of transaction
documents in a form satisfactory to the parties;
-- a Buyer funding condition and, if the Company decides to
carry out an equity fundraising, the completion of such fundraising
and admission of any new Ordinary Shares of the Company to trading
on AIM; and
-- SIMEC GHR project financing of up to GBP95 million, comprising (subject to the agreement of documentation) two new term loans, in addition to a GBP24 million capex facility as well as a GBP2 million revolving credit facility, being in place and each of which being in a form satisfactory to Atlantis.
Completion shall take place on the date on which the last
condition precedent is fulfilled.
The Sale and Purchase Agreement contains certain termination
rights for each of the Parties.
SIMEC Group is also a party to the Sale and Purchase Agreement
for the purpose of guaranteeing the Seller's obligations under the
agreement and certain other transaction documents.
Definitions and glossary
The following definitions apply throughout this announcement
unless the context requires otherwise:
"Acquisition" the proposed acquisition by the Company,
through its wholly owned subsidiary,
Atlantis Projects Pte. Ltd as the
Buyer, of the entire issued share
capital of SIMEC GHR from the Seller
on the terms of the Sale and Purchase
Agreement
"AIM" AIM, a market of the London Stock
Exchange
"AIM Rules" the AIM Rules for Companies and the
AIM Rules for Nominated Advisers,
as applicable
"AIM Rules for Companies" the rules for AIM companies published
by the London Stock Exchange, as amended
or re-issued from time to time
"AIM Rules for Nominated the rules for nominated advisers to
Advisers" AIM companies published by the London
Stock Exchange, as amended or re-issued
from time to time
"Board" the board of directors of the Company
as constituted from time to time
"Buyer" Atlantis Projects Pte. Ltd, a company
incorporated in the Republic of Singapore
with registration number 200608802H
"Cantor Fitzgerald Europe" Cantor Fitzgerald Europe, acting as
nominated adviser and broker to the
Company
"Company" or "Atlantis" SIMEC Atlantis Energy Limited, a company
or "SIMEC Atlantis Energy" incorporated in the Republic of Singapore
with registration number 200517551R
"Completion" completion of the Acquisition on the
terms of the Sale and Purchase Agreement
"Directors" the current directors of the Company
including the Independent Directors
and the SIMEC Nominated Directors
"Evercore" Evercore Partners International LLP,
acting as financial adviser to the
Company
"Financial Conduct Authority" the Financial Conduct Authority of
or "FCA" the United Kingdom
"FSMA" the UK Financial Services and Markets
Act 2000 (as amended) including any
regulations made pursuant thereto
"GFG Alliance" the alliance between Parduman Gupta
and Sanjeev Gupta and each of their
associated companies
"SIMEC Green Highland Renewables" SIMEC GHR Acquisitions MidCo Limited,
or "SIMEC GHR" a company incorporated in the United
Kingdom with company number 09454127
"Group" the Company, its subsidiary undertakings
from time to time and all of them
and each of them as the context admits
"Independent Directors" the current directors of the Company
other than the SIMEC Nominated Directors,
such Independent Directors of the
Company 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)
"London Stock Exchange" London Stock Exchange plc
"Ordinary Shares" the ordinary shares of no par value
in the capital of the Company
"Regulatory Information a regulatory information service authorised
Service" by the London Stock Exchange to receive,
process and disseminate information
in respect of AIM quoted companies
"Relationship Agreement" the relationship agreement between
the Company and SIMEC dated 21 May
2018 in respect of the Company
"Sale and Purchase Agreement" the conditional agreement between
the Buyer, the Seller and SIMEC Group
dated 23 November 2018 in relation
to the Acquisition
"Seller" SIMEC GHR Acquisitions TopCo Limited,
a company incorporated in the United
Kingdom with company number 09454126
"Shareholders" holders of Ordinary Shares from time
to time
"SIMEC" SIMEC UK Energy Holdings Limited,
a company incorporated in the British
Virgin Islands with company number
1801240
"SIMEC Group" SIMEC Group Limited, a company incorporated
in Hong Kong with company number 1651874
"SIMEC Nominated Directors" the current directors of the Company
nominated by SIMEC, such SIMEC Nominated
Directors comprising Mark Elborne
(Non-Executive Director and SIMEC
nominee) and Jay Hambro (Non-Executive
Director and SIMEC nominee)
"SUP" SIMEC Uskmouth Power Limited, a company
incorporated in the United Kingdom
with company number 05104786
"United Kingdom" or "UK" the United Kingdom of Great Britain
and Northern Ireland
"United States", "United the United States of America, its
States of America" or "US" territories and possessions, any states
of the United States of America and
the District of Columbia and all other
areas subject to its jurisdiction
"US Securities Act" the United States Securities Acts
of 1933, as amended, and the rules
and regulations promulgated thereunder
The following technical terms apply throughout this announcement
unless the context requires otherwise:
"COD" commercial operations date
"FiT" feed in tariff
"GWh" gigawatt hour
"MW" megawatts
"MWh" megawatt hour
"P50" 50 per cent. probability of output
exceeding estimate
"RPI" retail price index
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
ACQBLBDBXXDBGIX
(END) Dow Jones Newswires
November 23, 2018 11:36 ET (16:36 GMT)
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