TIDMRED
RNS Number : 9589R
RedT Energy PLC
01 November 2019
THE INFORMATION CONTAINED IN THIS ANNOUNCEMENT IS INSIDE
INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF REGULATION
596/2014
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS
RESTRICTED AND IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION,
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OR DISTRIBUTION WOULD BE UNLAWFUL
1 November 2019
redT energy plc ("redT", the "Company")
Interim funding secured
Proposed merger with Avalon Battery Corporation and fundraising
progressing
redT energy plc (AIM:RED), the energy storage technology
company, is pleased to announce that, further to the announcement
on 25 July 2019 of the proposed merger with Avalon Battery
Corporation ("Avalon") (the "Merger") and the proposal to raise at
least US$30m (GBP23m(1) ) of new funds (the "Fundraising"), redT
has agreed an interim loan of up to US$2.5m (GBP1.9m) (the "Interim
Loan") from Avalon to fund ongoing working capital requirements and
expenses relating to the Merger via a monthly drawdown schedule.
The Interim Loan from Avalon is funded by up to US$5m (GBP3.9m)
being made available to Avalon by Bushveld Minerals Limited
("Bushveld"). Bushveld is an integrated primary vanadium producer
based in Johannesburg and traded on the AIM market of the London
Stock Exchange ("AIM"). Its subsidiary, Bushveld Energy Limited, is
an energy storage solutions provider that supports a number of
companies in the vanadium redox flow battery sector.
As announced in July, the Merger will constitute a reverse
takeover ("RTO") under the AIM Rules for Companies, which involves
considerable expense and also time during which redT will continue
to consume cash. The Interim Loan will enable redT to complete the
due diligence process, finalise the negotiation of the Merger and
progress the Fundraising. redT's Board expects that, with the
Interim Loan in place, the Company and Avalon will move swiftly
towards completing the Merger and the Fundraising and, as a larger
and financially robust business, embark upon its exciting
development and growth strategy. The merged business will be a
leading player in the growing energy storage market. With
operations in North America, Europe, and Asia and sales offices in
Australia and Africa, the merged business will have a global
footprint able to capitalise on the significant opportunities for
energy storage presented by the worldwide shift to renewable
energy.
In addition to the Interim Loan, redT has entered into a
separate agreement with Bushveld (the "Bushveld Agreement") under
which, if the Merger completes successfully, the US$5m provided to
Avalon by Bushveld will convert into ordinary shares in the merged
business ("Ordinary Shares"). Bushveld will become a shareholder in
the merged business on the same terms (subject to certain
conditions) as other investors participating in the Fundraising.
Bushveld will have the right but not the obligation to invest
further funds into the merged business as part of the Fundraising
and on the same terms as other investors, at a maximum price of
1.65p per Ordinary Share.
Bushveld will, upon completion of the Merger and the
Fundraising, receive a commitment fee of 20 per cent. of the
principal amount of its loan to Avalon (the "Commitment Fee").
Bushveld will also receive interest at a rate of 12 per cent. per
annum which, together with the Commitment Fee, will roll up and
convert into Ordinary Shares on completion of the Merger and the
Fundraising. The Ordinary Shares received by Bushveld will be
issued at a maximum price of 1.65p per Ordinary Share and on the
same terms as other investors participating in the Fundraising.
redT has also agreed, subject to the completion of the Merger
and the Fundraising, to grant Bushveld a right of first refusal to
supply vanadium products to the merged business for two years, and
thereafter subject inter alia to Bushveld continuing to
beneficially own at least five per cent. of the issued Ordinary
Shares. Bushveld will also, subject to it continuing to
beneficially own at least five per cent. of the issued Ordinary
Shares, have for one year from completion of the Merger and the
Fundraising, the right to nominate a member of the Board of the
Company. Bushveld will retain that right after one year provided it
beneficially owns at least 10 per cent. of the issued Ordinary
Shares. In addition, for so long as Bushveld beneficially owns at
least 20 per cent. of the issued Ordinary Shares, it shall have a
right to nominate two members of the Company's board.
In the event that the Merger and the Fundraising do not complete
successfully, the terms of the Interim Loan provide that the
principal amount of up to US$2.5m, together with interest at 12 per
cent. per annum, becomes repayable to Avalon six months after any
announcement by the Company that the Merger is no longer
proceeding. redT has granted security over certain of its assets to
Avalon as part of the Interim Loan.
Trading in redT's ordinary shares on AIM will remain suspended
until either the publication of an admission document in relation
to the Merger or confirmation is given that the Merger is no longer
proceeding. The parties remain committed to publishing the
admission document as soon as possible.
Based on redT's latest cash flow forecasts, which assume the
full Interim Loan of US$2.5m is received, the Board expects that
the Company will have sufficient cash to complete the Merger and
the Fundraising process in the first quarter of 2020.
The Merger and the Fundraising remain subject inter alia to
further due diligence by each party, definitive legal agreements
being reached and a successful Fundraising to provide the necessary
funds for the enlarged business. The Fundraising and the Merger
will be subject to the approval of redT's shareholders and the
Merger itself is also subject to the approval of the shareholders
of Avalon.
Further announcements will be made in due course.
Information on Avalon and the combined business
Avalon Battery Corporation is a Delaware Corporation with
offices in the San Francisco area, operations in Vancouver and a
low-cost manufacturing presence in China. Avalon's technology is
very similar to that of redT and the combination of the two
businesses will enable the merged business to reduce costs and
accelerate product development, combining the best features of each
company's products and reducing the costs of manufacture. Both
companies already have a substantial sales opportunity pipeline,
which the combined business will be well placed to supply with its
world-leading products.
Neil O'Brien, Executive Chairman of redT commented:
"I am delighted that we have secured this interim funding. It
enables us to progress the Merger planning with Avalon together
with our fundraising and I hope and expect that we will be able to
embark on this exciting new phase in the Company's development
soon. We believe the market for storage assets to support renewable
energy targets is developing rapidly and the combination of redT
and Avalon will be a leading player in this market. We are looking
forward to working with Bushveld as a partner and strategic
investor once we have completed the merger."
Larry Zulch, Chief Executive Officer of Avalon commented:
"The merger of Avalon and redT has become only more compelling
as we learn about each other while working through the merger and
due diligence process. Bushveld Energy provided funding to Avalon
with the intention that some would be used by redT to support this
transaction, an example of Bushveld Energy's broad support of the
vanadium redox flow battery market. We are grateful for Bushveld's
support and look forward to building a business that conclusively
realizes the potential of our combined capabilities in renewable
energy storage."
(1) US$ denominated amounts converted at US$/GBP rate of
GBP1.293 on 31/10/2019
For further information, please contact:
redT energy plc
Neil O'Brien, Executive Chairman
Fraser Welham, Chief Financial Officer
Joe Worthington, Investor & Media Relations +44 (0)20 7121 6111
Avalon Battery Corporation
Larry Zulch, CEO
Matt Harper, President +1 604 563 2144
VSA Capital Limited (Financial Adviser)
Andrew Raca / Simon Barton +44 (0)20 3005 5000
VSA Capital Limited (Broker)
Andrew Monk +44 (0)20 3005 5000
Investec Bank plc (Nominated Adviser
and Joint Broker)
Jeremy Ellis +44 (0)20 7597 4000
Notes to Editors
About redT energy
redT energy plc are experts in energy storage, specialising in
the design, manufacture, installation and operation of energy
storage infrastructure which creates revenue alongside reliable,
low-cost renewable generation for businesses, industry and
electricity distribution networks. Using patented vanadium redox
flow technology to store energy in liquid, redT's own energy
storage machines can be run continually with no degradation:
charging and discharging for over 25 years, matching the lifespan
of renewable assets in on-grid, off-grid and weak-grid
settings.
redT's energy storage solutions, developed over the past 15
years, address today's changing energy market by providing a
flexible platform for time shifting surplus renewable power,
securing electricity supplies and earning revenue through grid
services. The company has customers in the UK, Europe, sub-Saharan
Africa, Australia and Asia Pacific. redT energy plc is admitted to
trading on AIM (AIM:RED) and has experts located in the UK, Europe,
Australia and Africa. For more information, visit
www.redtenergy.com
For sales, press or investor enquiries, please contact the redT
team on +44 (0)207 061 6233.
About Avalon
Avalon Battery was founded on the principle that productized
vanadium-based flow batteries will revolutionize energy projects
and play a critical role in a renewable energy future. With
operations in Fremont, California, USA and Vancouver, Canada, and a
low-cost manufacturing presence in Suzhou, China, Avalon produces
dependable, safe, and economical energy storage systems.
Avalon believes the foundations of its product excellence are
its technology and engineering team. Since 2005, its team has been
one of the global leaders in design, production and deployment of
vanadium flow batteries(2) ; the team now counts over 140 years'
experience in vanadium flow battery development, has been involved
in the deployment of over 15MWh of vanadium flow batteries since
2005, and has invented over 50 related independent patents.
www.avalonbattery.com
(2) Based on searches of the US DOE Global Storage Database for
electro-chemical, vanadium flow batteries understood to be in
operation as at 29 October 2019.
This announcement is not intended to, and does not, constitute
or form part of any offer, invitation or the solicitation of an
offer to purchase, otherwise acquire, subscribe for, sell or
otherwise dispose of, any securities whether pursuant to this
announcement or otherwise.
The distribution of this announcement in jurisdictions outside
the United Kingdom may be restricted by law and therefore persons
into whose possession this announcement comes should inform
themselves about, and observe, such restrictions. Any failure to
comply with the restrictions may constitute a violation of the
securities law of any such jurisdiction.
MAR
The information contained within this announcement is considered
by the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No.596/2014. Upon the publication
of this announcement via a Regulatory Information Service, this
inside information will be considered to be in the public
domain.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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