Atlantis Resources PLC (LON:ARL) is to transform itself into a diversified renewable energy company with the acquisition of a significant power generation asset, leading to a change of name.
The AIM-listed tidal power developer has agreed to acquire SIMEC Uskmouth Power Limited (SUP) from SIMEC UK Energy Holdings Limited, a GFG Alliance company, the owner of a 220 megawatt capacity power plant in South Wales which will be converted to use an end-of-waste energy pellet as fuel.
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In consideration for the acquisition, Atlantis will issue SIMEC with new ordinary shares in the company equivalent to a 49.99% stake in the enlarged share capital.
The group, which plans to change its name to SIMEC Atlantis Energy Limited, said: "The transaction is anticipated to be the first of a number of acquisitions from the GFG Alliance that will transform Atlantis into “a diversified renewable energy company of scale owning high quality development and generating assets across the sustainable energy spectrum, supplementing its existing portfolio of assets.”
Based on the most recent unaudited accounts for the year ended 31 March 2017, the net asset value of SUP was approximately US$76.1mln (approximately £60.8mln) and it generated turnover of approximately US$94.4mln (approximately £72.4mln) and a net loss of approximately US$7.24mln (approximately £5.5mln) due to mothballing of the plant while it awaits conversion work to start.
Atlantis said the acquisition, which constitutes a reverse takeover under AIM rules and requires shareholder approval, is expected to provide long-term contracted cash flows for its shareholders, and to service medium to long-term senior debt intended to be raised for the purposes of the conversion.
20-year power purchase agreements
The group said 20-year power purchase agreements proposed to be entered into with GFG Alliance companies for the converted plant will cover all power volumes generated providing downside protection and minimum contracted cash flows for attractive debt financing.
The company said it expects to carry out a further equity fund raising, for form, size and pricing of which are to be determined, for working capital purposes in connection with the transaction.
Tim Cornelius, CEO of Atlantis commented: "Along with the investment in SUP, the establishment of a formal and long term relationship with SIMEC and the GFG Alliance will be transformational for our Company as we seek to create a diversified renewable energy platform of scale. SIMEC and the GFG Alliance are highly respected within the industry and will significantly enhance our visibility on the international stage.”
He added: “We see additional material value for Atlantis Shareholders in what we believe is the high quality renewable power asset pipeline to which Atlantis will potentially have access following completion of the Transaction."
Shares in Atlantis' will be suspended from trading with effect from 7.30am this morning.