Alkaline Fuel Cell Power Corp (AFCP) has announced the acquisition of a power and heat business, which will offer a step-change to the green-energy-focused group's commercialization plans and growth.
The fuel cell company has struck a definitive deal to buy, for cash and shares, all of the combined heat and power (CHP) activities of AI, a group, which is made up of AI Renewable 2018-I Limited Partnership, AI Renewable 2020-I Limited Partnership and 2191 Yonge Ltd.
Upon closing the deal, expected within 30 days, it will provide Alkaline Fuel Cell with "immediate recurring, long term gross operating income" and a pipeline of projects to provide further income, the company said.
READ: Alkaline Fuel Cell Power partners with Prague-based University of Chemistry and Technology to advance its next-gen fuel cell system
"Alkaline Fuel Cell Power Corp continues to progress towards commercialization of our micro-combined heat and power (Micro-CHP) system," Matthew Fish, the company's interim CEO said in a statement. Fish has replaced Jef Spaepen, who has left the company.
"The integration of AI's CHP business along with key members of management will help AFCP accelerate our milestone timelines and the transition of existing CHP to a clean zero-emission hydrogen powered energy solution with immediate revenue and a very large project pipeline, setting the stage for growth worldwide," Fish added.
Electricity prices and CO2 emissions continue to steadily rise and the need for on-site, efficient energy sources is becoming increasingly apparent. The AI high-efficiency CHP system provides reliable, sustainable and efficient, on-site energy 24/7 and can be tailored for residential, commercial and industrial use.
AI's pipeline also consists of over 30 potential CHP projects at various stages. The estimated capital investment to bring these to commercial operation within the next 24-36 months is estimated at $50 million.
"It is estimated that, based on the CHP system currently in commercial operation, when all of the potential CHP systems are in commercial operation, potential gross revenue could be up to approximately $16.61 million, potential EBITDA could be up to approximately $7.68 million and potential net income up to approximately $1.64 million, Alkaline Fuel Cell noted.
The consideration for the purchase consists of around 22.57 million Alkaline Fuel Cell shares and $3 million in cash. The firm has already advanced a $2 million loan to the vendors, which will be applied against the cash consideration on closing.
The remaining $1 million in cash is due no later than January 2, 2023.
As well as the price payable on closing, Alkaline Fuel Cell will pay further consideration upon the achievement of two potential milestones. The first is if the AI business obtains 'Green Loans' and/or government grants for the AI Business and/or their customers of $2.5 million or more for the installation of CHP units in buildings within 18 months following closing.
The second milestone is if the AI business signs contracts to install CHP units in buildings containing not less than 2,000 additional residential units over a minimum of seven buildings (excluding 2181 Yonge and 2191 Yonge) within 24 months following closing.
Also in the statement, the company said a press release soon will outline the firm's "exciting" milestones achieved in the last six months in Belgium, and anticipated ongoing progress towards commercial product viability as well as the integration benefits with AI Renewable.
Alkaline Fuel Cell Power also revealed that global energy executive Dr Richard Lu has joined the board of directors, replacing Eugene Beukman who has resigned as a director.
The company is focused on the development, production and commercialization of micro-combined heat and power (micro-CHP) systems based on alkaline fuel cell technology.
The tech offers an energy source that generates zero CO 2 emissions with pure water as the only by-product, making it ideally suited for residential and small-to-medium-sized power markets.
Contact the author at giles@proactiveinvestors.com