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SIMEC to acquire significant stake in Atlantis via complex transaction

The AR1500 tidal energy turbine. Source: Lockheed Martin

December 14 (Renewables Now) - One of the investors in the 320-MW Swansea Bay Tidal Lagoon in Wales has agreed a share purchase transaction with Atlantis Resources (LON:ARL) that would give the latter access to a pipeline of diverse renewable energy assets.

International energy, infrastructure and natural resources business SIMEC Group Ltd, part of GFG Alliance, has signed a conditional deal with Atlantis under which SIMEC UK Energy Holdings Ltd will acquire a 49.99% stake in the Singapore-based tidal energy company. Atlantis will issue the stock in exchange for taking over SIMEC Uskmouth Power Ltd, the owner of a coal-fired power plant in South Wales. The particular facility is planned to be converted so that 220 MW of its capacity would use an end-of-waste energy pellet as fuel. Atlantis noted that once this plant enters commercial operations in 2020 it will be providing long-term contracted cash flows for Atlantis' shareholders.

The converted facility will be selling its entire output to GFG Alliance companies under two 20-year contracts. The plant will receive fuel under a proposed 20-year deal with a joint venture between a Liberty House Group company and Dutch recycling group N+P Group BV.

SIMEC and Atlantis have also agreed the principal terms of a partnership under which the tidal energy company will get a right of first offer to a pipeline of renewable power assets owned or subsequently acquired by GFG Alliance.

Atlantis is the company behind the 398-MW MeyGen tidal energy project in Scotland. While also using third-party turbines as part of the Scottish project, the Singaporean firm has its own tidal devices. SIMEC, meanwhile, owns a stake in Tidal Lagoon Plc, which develops tidal lagoon opportunities in Wales and north-west England.

This is not the first time that Atlantis demonstrates its willingness to expand beyond tidal energy. In January 2017, the company announced plans to set up a division focused on “wet renewables”, including floating wind power.

“We are particularly excited about this opportunity to expand our investment in the tidal power sector which we see as a game-changing technology that holds huge possibilities for cheap, clean power in the future. This is also a major step towards our ambition to create 1 GW of renewable energy capacity in the UK within the next three years,” said Jay Hambro, SIMEC's chief investment officer and CEO of Mining and Energy.

The transaction announced today is subject to finalising further documentation and to stockholder clearance. SIMEC will seek a waiver of the obligation to make a mandatory offer for the remaining Atlantis shares. It will be entitled to nominate two persons to be directors of Atlantis.

Following the move, Atlantis will be renamed SIMEC Atlantis Energy Ltd. The company noted that it expects to conduct a further equity fundraising for working capital purposes.

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Ivan is the mergers and acquisitions expert in Renewables Now with a passion for big deals and ambitious capacity plans.

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