March 18 (Renewables Now) - UK-based redT energy Plc (LON:RED) last week entered into a merger agreement with US peer Avalon Battery Corporation to form a financially stable energy storage expert with strong competitive advantages and a base for rapid growth.
Under the terms of the stock-for-stock deal, redT will issue close to 1.74 billion new ordinary shares at GBP 0.0165 (USD 0.0195/EUR 0.0178) apiece, thus valuing Avalon's issued shares at USD 36.1 million (EUR 33m). Immediately prior to admission, the company will execute a share consolidation of its issued share capital on a 50 to 1 basis.
The enlarged group resulting from the merger, with operations in North America, Europe and Asia, will be renamed to Invinity Energy Systems Plc.
In an attempt to drive Invinity's growth and development and provide working capital, redT’s broker, VSA Capital, has conditionally placed some 479.4 million new ordinary shares at the issue price to existing investors. By doing so, the company will raise GBP 7.9 million before expenses. It will also raise up to GBP 6.3 million gross through a separate open offer for qualifying shareholders of up to 380.5 million new ordinary shares at that same price.
Meanwhile, redT has agreed a GBP-3-million loan facility from Riverfort Global Opportunities PPC Limited, while an existing USD-5-million loan from South African vanadium producer Bushveld Minerals Ltd (LON:BMN) will be converted to equity.
"Despite the challenging equity market conditions following the coronavirus outbreak, it is testament to the strength of our investment story that we have received major support both from current institutional shareholders and new investors," commented Neil O'Brien, chairman of redT energy.
When first unveiling the merger plan in July 2019, redT said that the two companies have very similar technologies and their combination would enable the reduction of costs and an acceleration in product development. Upon completion of the tie-up, which is pending stockholder clearance, Invinity will be able to offer a vanadium flow battery that competes effectively with other energy storage technologies, redT noted.
(GBP 1.0 = USD 1.185/EUR 1.081)
(USD 1.0 = EUR 0.913)