Heads of Terms Signed with Equitix

RNS Number : 8302H

SIMEC Atlantis Energy Limited

20 November 2018

 

The information contained in this announcement is inside information under the Market Abuse Regulation (EU) No 596 / 2014. The person responsible for arranging the release of this announcement on behalf of Atlantis is Tim Cornelius, Chief Executive Officer of SIMEC Atlantis Energy.

20 November 2018

SIMEC ATLANTIS ENERGY LIMITED

("Atlantis" or the "Company")

Atlantis signs Heads of Terms to sell 25% shareholding in the 220MW Uskmouth Conversion Project to leading UK infrastructure fund manager, Equitix

Highlights

·      Atlantis has signed Heads of Terms to sell a 25% shareholding in the 220 MW Uskmouth Conversion Project in Newport, Wales ("Uskmouth Power") for £32.9 million in cash to leading UK infrastructure fund manager Equitix

·      This implies an equity value of £131.5 million for Atlantis' current 100% shareholding in Uskmouth Power

·      The investment is conditional on Equitix completing its confirmatory due diligence on Uskmouth Power and agreeing satisfactory transaction documentation

·      Final approval of the Equitix Investment Committee is required prior to completion of the transaction which is anticipated to complete in H1 2019

·      Subject to the above conditions, in addition to its purchase consideration of £32.9 million, Equitix will also contribute 25% of the remaining budgeted development costs to achieve financial close of the third party debt financing envisaged for the conversion costs of Uskmouth Power and then 25% of the conversion costs that will be funded by shareholders.

Atlantis, a diversified sustainable energy generation company, is delighted to announce that it has today signed a Heads of Terms to sell a 25% shareholding in Uskmouth Power for £32.9 million in cash to leading UK infrastructure fund manager Equitix.

The existing Uskmouth coal-fired power plant will be converted to generate electricity from 100% waste derived energy pellets. Following conversion, the power station will generate 220 MW of baseload power using energy pellets produced from non-recyclable waste destined for landfill, with an average calorific value of 20 MJ per kg. Uskmouth Power has already agreed 20 - year power purchase agreements and a 20 - year fuel supply agreement. Under the 20 - year power purchase agreements, a proportion of the electricity generated will be sold to the adjacent energy pellet processing facility at an indexed fixed price with the remainder exported to the grid and benefiting from an indexed floor price with potential upside from higher market prices.

The conversion is expected to take 18 months post completion of front-end engineering and design ("FEED") and the converted station will have an operational life of at least 20 years.

Market leader in waste to energy and renewable energy investment in the UK

Equitix is a major investor and developer in the UK and European infrastructure markets with more than £3.0bn of funds under management across its five core funds and managed accounts. As a long-term investor, its 25-year funds invest in infrastructure assets across a range of sectors including energy from waste, renewables (offshore transmission, offshore and onshore wind, waste processing and solar-power), highways, street lighting and social infrastructure.

Relevant finance raising experience

Equitix has extensive experience in raising competitive finance for infrastructure projects covering traditional bank funding, private placements, publicly listed wrapped and unwrapped bonds.  As such, it has excellent relationships with the potential funders being considered for the project to supplement and further strengthen those of Atlantis. More specifically, Equitix has relevant sector experience, having invested in a number of other waste to energy projects over the past few years in the UK and across Europe.

Tim Cornelius, CEO of SIMEC Atlantis Energy, commented:

"Equitix is one of the most sophisticated and experienced investors in the waste to energy sector in the UK. They will bring expertise in financing, EPC contracting and negotiation, waste contracting and offtake negotiation to this world leading project. We are obviously delighted to welcome Equitix into this project as a co-funder, but it is also their personnel, investment track record and credibility in the infrastructure markets globally that has our team so excited. This is a huge milestone for Uskmouth Power which will ensure the UK is ready for a future focused on reduced coal and increased renewable energy generation."

Hugh Crossley, Chief Investment Officer of Equitix commented:

"This transaction represents a great opportunity for Equitix to invest in a sector in the UK that fits well with our core infrastructure strategy. We are committed to investing for the long-term in projects like Uskmouth Power which we expect will help us to continue to offer our investors predictable yields through stable, long-term cash flows underpinned by its robust contractual structure.

"Uskmouth Power is the latest addition to Equitix's significant capabilities in the renewable energy sector. Equitix has built its expertise through bidding, developing and managing renewable energy projects.

"Today, Equitix manages a diversified portfolio of high quality investments, including over 2.5 gigawatts of transmission and generation assets across a range of different technologies including solar, onshore wind and waste processing. Equitix has a strong in-house technical, operational and regulatory expertise in renewables and regulated assets.

"As a business, we are as committed as SIMEC Atlantis Energy Limited, the majority owner and operator, to using Uskmouth Power as a blueprint for further conversion of similar plants worldwide to help address the key challenge of how we can treat waste material in an environmentally-responsible manner and use it to generate low carbon energy."

Shareholders should be aware there can be no certainty that the investment by Equitix will complete.  A further announcement will be made in due course, when it is appropriate to do so.

Enquiries:

SIMEC Atlantis Energy Limited	via FTI Consulting
Tim Cornelius, Chief Executive Officer Andrew Dagley, Chief Financial Officer
Cantor Fitzgerald Europe (Nominated Adviser and Joint Broker)	[phone]
Rick Thompson Richard Salmond David Porter
Macquarie Capital (Europe) Limited (Joint Broker)      Nick Stamp	[phone]
FTI Consulting	[phone]
Ben Brewerton Alex Beagley James Styles Molly Stewart

Notes to Editors

Simec Atlantis Energy

SIMEC Atlantis Energy is the global developer, owner and operator of sustainable energy projects with a diverse portfolio of more than 1,000 megawatts in various stages of development. This includes a 77% stake in the world's largest tidal stream power project, MeyGen, and the conversion of the 220MW Uskmouth Power Station.

In 2017 we entered into a strategic partnership with SIMEC, a member of the GFG Alliance, to convert the Uskmouth Power Plant to use an end-of-waste energy pellet as fuel. The plant is expected to enter commercial operations in 2020 and will sell its power to GFG Alliance companies under two 20-year power purchase agreements. A successful conversion will tackle the pressing issue of non-recyclable waste in the UK and will form the blue-print for other large-scale conversion projects across the globe.

We intend this to be the first of a number of acquisitions aiming to transform SIMEC Atlantis into a diversified energy Company of scale, owning development and generating assets across the sustainable energy spectrum in Europe, Asia and Australia, complementing our existing UK pipeline.

https://simecatlantis.com/

Equitix

Equitix is a major investor and developer in the UK and European infrastructure markets with more than £3.0bn of funds under management across its five core funds and managed accounts. As a long-term investor, its 25-year funds invest in infrastructure assets across a range of sectors including energy from waste, renewables (offshore transmission, offshore and onshore wind, waste processing and solar-power), highways, street lighting and social infrastructure. 

http://www.equitix.co.uk/index.php 

 

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