Australian renewables firm Carnegie Clean Energy Ltd (ASX:CCE) plans to sell its solar and microgrid business, Energy Made Clean (EMC), to Sydney-based investment house Tag Pacific Ltd (ASX:TAG) in exchange for a 32% stake in the buyer.
The planned transaction will create an ASX-listed engineering, procurement and construction (EPC) and build, own, operate (BOO) business active in the off-grid and fringe-of-grid solar, battery and microgrid markets. This enlarged entity, which will take the name of Tag's unit MPower, is expected to start fiscal 2019, which begins on July 1, 2018, with a combined committed order book of about AUD 20 million (USD 14.7m/EUR 12.7m). Combined pro forma revenues would stand at over AUD 50 million in fiscal 2018.
“A scrip based merger of EMC with MPower provides Carnegie shareholders with direct ownership of a specialist microgrid market leader and a strong financial platform for the 2019 financial year and beyond. The Carnegie board believes this is a more compelling alternative for shareholders than an organic growth strategy with EMC which would require additional working capital over a longer time frame,” said Michael Ottaviano, CEO and managing director of Carnegie.
The seller intends to focus on commercialising its CETO wave energy technology, but will keep 100% ownership of the Garden Island Microgrid and its current 50% stake in the 10-MW Northam solar farm.
Under the terms of the newly signed Implementation Deed, Carnegie will receive a bit over 58.5 million fully paid ordinary shares in Tag. This corresponds to a stake of around 32% post completion of the transaction but before a capital raise by Tag. The proceeds from the said capital hike are intended to help fund the growth of the enlarged business and the development and financing of BOO projects.
Upon completion of the merger, MPower will be headed by Tag Pacific’s current CEO, Nathan Wise. The company will set up a dedicated vehicle to house its BOO solar and battery energy storage assets.
The transaction is pending the execution of binding legal documents and clearance from both parties’ stockholders.
(AUD 1.0 = USD 0.735/EUR 0.635)
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Source: Carnegie Clean Energy (www.carnegiece.com).
