$2.5m Enphys funding commitment

i(x) Net Zero PLC

07 August 2023

 

 The information contained within this Announcement is deemed by i(x) Net Zero plc to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018 ("MAR").

07 August 2023

i(x) Net Zero PLC

("i(x) Net Zero" or the "Company")

i(x) Net Zero commits up to US$2.5 million to Enphys Management Company

i(x) Net Zero PLC (AIM: IX.), the investing company which focuses on the Energy Transition, is pleased to announce that it has committed to invest an additional US$2.5 million into Enphys Management Company ("EMC") and that its wholly owned subsidiary i(x) Investments LLC has entered into a revised EMC LLC Agreement with LAIG Investments.

The investment, the cost of which  will be spread over the next four years and will immediately take the Company's ownership in Enphys from its current level of 14.5% to 30.0%. The additional cash investment, together with the increased valuation at which the investment was agreed generates an uplift in the Net Asset Value of the Company's total holding in EMC from $10.3 million to $16.7 million, based on the valuation as at 31 December 2022.  10% of the issued capital in EMC is subject to pro-rata clawback if payments by the Company are either stopped or not made  when due in accordance with the revised terms and a further portion subject to additional  clawback if a minimum of US$1 million is not funded in full, provided that the Company will retain at least a 20% interest in EMC. In addition if before 5 August 2025 EMC's fair market value falls below $25 million and EMC issues additional equity securities, the Company will benefit from anti dilution provisions to ensure that that the value of its equity interest does not fall below the amount contributed. 

The new funding, being made from the Company's existing cash resources, will provide additional support to EMC for budgeted working capital, certain other approved costs and investments into new assets as it initally progresses towards a merger opportunity for its SPAC, Enphys Acquisition Corp, with the intention of forming a major renewables energy group that can be a regional champion for sustainability in the Americas and later expanding its assets under management with new assets and new investment structures.

EMC is looking at a range of public and private investment opportunities focused on renewables and energy transition in Latin America and has a direct ownership in Enphys Acquisition Sponsor, LLC, the sponsor company of Enphys Acquisition Corp., a NYSE-listed SPAC targeting renewable energy businesses in Latin America.

These revised funding provisions replace the previously agreed mechanism for the Company to invest additional capital to increase its interest in EMC such that its holding could increase to 25% of EMC.   The Company has also agreed a revised distribution waterfall with LAIG and EMC to provide once unreturned cash capital contributions have been returned in full, LAIG will receive an amount equal to 50% of all returned cash capital contributions and thereafter pro-rata between the owners.  As all of the Company's contributions have been in cash, this maintains the Company's right to the first distributions up to an amount equal to its capital contributions.  This replaces the previous waterfall of returns and preferred returns.  The ability of LAIG and EMC to redeem the Company's interest at a 2.5x multiple of the Company's contributions has been amended so that it will now cease if the fair market value of the Company's  interest remains at or above US$19.5 million for a period of 12 months. LAIG and its founder have also entered into certain security arrangements in favour of the Company until such time.  

The board of EMC will now be amended to give the Company two directors with LAIG having the right to appoint three directors. 

Pär Lindström, Chief Executive Officer of the Company, said: "This investment is reflective of our belief of the significant potential contained within Enphys and our strategy at i(x) Net Zero to own considerable stakes in our portfolio companies. We look forward to supporting the company as it looks to establish itself as a leading operator in the alternative energy sector in Latin America."

- Ends -

This announcement contains inside information.

For further information visit https://ixnetzero.com/ or contact:

i(x) Net Zero	Via Buchanan below
Pär Lindström - Chief Executive Officer
Canaccord Genuity Limited Nominated Adviser & Broker	[phone]
Max Hartley
Harry Pardoe
Buchanan
Helen Tarbet	[phone]
Simon Compton	[phone]

Notes to Editors

About i(x) Net Zero PLC

i(x) Net Zero PLC is an AIM quoted investing company that seeks to provides its shareholders with the opportunity to create long-term capital growth with positive, scalable, measurable and sustainable impact on the environment and on the communities it serves.

In accordance with its belief that the world's biggest problems are also the biggest market opportunities, i(x) Net Zero focuses on two critical areas in which it aims to make a positive impact: (i) Energy Transition and (ii) Sustainability in the Built Environment.

The Company uses a multi-strategy investment approach, providing the companies in which it invests with the expertise and catalytic capital to help them grow. To date, i(x) Net Zero has invested in biofuels, direct air capture (carbon removal), renewable energy, sustainable workforce housing and net zero construction technology.

i(x) Net Zero is a  signatory to the UN Principles for Responsible Investing. 

The Company has received the London Stock Exchange's Green Economy Mark.

 

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