SIMEC Atlantis Energy Limited has reached agreement to conditionally acquire SIMEC Green Highland Renewables, an operator of small hydroelectric projects.
According to a press release, 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, in the UK, owns 11 operational hydropower projects encompassing 15 schemes with a combined capacity of 20 MW (attributable to SIMEC GHR and third party interests), one project under construction of 2 MW and one project at the development stage (comprising three schemes) of 5.9 MW. Of the total capacity, including the assets under construction and development, SIMEC GHR has an interest in 24.9 MW of capacity, with the balance being attributable to third party interests under joint ventures in relation to three projects.
SIMEC Atlantis 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 agreed enterprise value attributed to SIMEC GHR is £124.7 million (US$159.8 million), which reflects that SIMEC GHR will be acquired with up to £95 million (US$121.8 million) of long-term project financing in place on terms satisfactory to Atlantis, comprising (subject to the agreement of documentation) two new term loans. SIMEC GHR is also expected to benefit from a £24 million (US$30.8 million) capex facility as well as a £2 million (US$2.6 million) revolving credit facility, neither of which will be drawn down at completion of the acquisition. Taking into account this long-term project financing, it is expected the buyer will pay £29.7 million (US$38.1 million) for SIMEC GHR.
The proposed acquisition is classified as a related party transaction under the AIM Rules for Companies because 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 about 49.99% of the company’s issued ordinary share capital). Accordingly, the Independent Directors of Atlantis consider that the terms of the proposed acquisition are fair and reasonable insofar as the company’s shareholders are concerned.
“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,” said Tim Cornelius, chief executive officer of SIMEC Atlantis Energy. “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.”