Alternus Energy PLC (EURONEXT:ALT), an Ireland-based vertically integrated independent power producer (IPP), has announced a definitive business combination with Clean Earth Acquisitions Corp, a Nasdaq-listed climate technology and energy transition-focused special purpose acquisition company (SPAC).
The deal will see Alternus owning 64% of Clean Earth, which is changing its name to Alternus Clean Energy Inc.
The combined company will be led by Vincent Browne, currently chairman and chief executive officer of Alternus, and the business will continue to operate as normal.
“Alternus has reached an inflection point in our growth, with a significant increase in contracted pipeline and operating assets over the past year,” Browne said in a statement.
“We are grateful to have support from investors in Europe and the United States who are committed to the clean energy transition. We expect that this proposed transaction will leave Alternus well-positioned and well-capitalized to continue developing and/or acquiring, installing and operating renewable energy assets across Europe and also now in the United States.”
READ: Alternus Energy reports ‘strong’ growth in Q2 revenue and profit
Alternus said it will transfer its equity ownership in substantially all its subsidiaries in exchange for up to 90 million newly issued shares in Clean Earth.
Initially, Clean Earth will issue 55 million shares at closing - subject to a working capital adjustment capped at 1 million additional shares - plus up to 35 million shares subject to certain earn-out provisions, which will be deposited in escrow and released if certain EBITDA and share price targets are met.
Assuming no redemptions by Clean Earth shareholders, the combined company will have approximately $220 million of cash available.
Alternus said the combined company is expected to have an initial equity value of approximately $863 million, assuming no redemptions by Clean Earth shareholders.
The business combination valuation is based on 168 megawatt (MW) of current operating and 649MW of in-development projects owned by Alternus, plus 845MW of contracted acquisitions with an additional 800MW of solar photovoltaic (PV) projects that Alternus has exclusive rights to purchase subject to due diligence and entering into definitive agreements.
Alternus said its highly experienced management team has laid the foundation for continued strong growth as shown in recent years with over 1.5 gigawatt (GW) of projects yet to reach production.
It said it has successfully deployed €140 million of a €200 million green bond issuance and is in advanced discussions with Tier 1 European banks for up to €500 million in new debt facilities.
The company believes it is positioned to capture new market share in Europe as soaring energy costs are driving policy change and capital towards clean power. European solar PV capacity is set to grow around 40% over the next three years, it said.
It noted that the European Commission is assessing whether the EU could achieve a higher target of a 45% share of renewable energy by 2030, instead of the proposed 40%, to accelerate its shift from Russian fossil fuels following the invasion of Ukraine.
Alternus also entering the burgeoning US solar market
Aaron Ratner, CEO of Clean Earth commented: “Alternus has built a strong foundation for rapid growth of its renewable power portfolio, and with their continued expansion we anticipate that Alternus will continue to generate consistent, long-term returns for shareholders.
“Our business combination, Nasdaq listing and the anticipated access to new equity and potentially lower cost debt capital is expected to fuel this expansion and accelerate the company’s conversion of development and contracted projects into cash-flowing operating assets.”
Nicholas Parker, executive chairman of Clean Earth, added: “The passage of the US Inflation Reduction Act will be a game-changer for the growth of solar power and other renewable energy technologies. Likewise in Europe, solar PV capacity is set to grow around 40% over the next three years. We believe Alternus is well positioned to take advantage of this once-in-a-generation energy transition.”
Closing of the business combination transaction, which is expected in the first quarter of 2023, is contingent on Clean Earth shareholder approval, following filing of the proxy statement, approval for listing on Nasdaq, and a minimum of $25 million in available cash. Alternus said it may waive the minimum cash condition at its discretion.
Clean Earth and Alternus intend to arrange a committed capital on-demand equity placement program of up $100 million, which can be called upon at the discretion of the combined company, and potentially other financing options ahead of completion of the business combination.
Alternus shares will continue to trade on the Euronext Growth market in Oslo, while Clean Earth’s common stock is expected to continue to be listed on the Nasdaq Market.
Bonds issued by Solis Bond Company DAC will continue to trade as normal. Bondholders of Solis Bond Company DAC will be approached in due course in relation to the transaction.
Alternus said it will be holding a capital markets update to discuss the impact of this proposed transaction and on the business in general on Monday, October 17 at 3.00pm CET (10:00am EST).
Contact the author at jon.hopkins@proactiveinvestors.com