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Renewable energy and battery storage project developer MPower's (ASX: MPR) efforts to pay down debt have culminated in a $19 million business and asset sale to a subsidiary of climate investment firm Wollemi Capital.
MPower's directors unanimously recommend shareholders vote in favour of the proposal, comprising the company's renewable energy platform and services business, the Lakeland Solar & Storage Project in Far North Queensland, other assets and a pipeline of project opportunities.
Earlier this year the listed company sold its Narromine Renewable Energy Project in Central NSW, converting a $10 million funding facility from AMPYR Distributed Energy into project equity, banking a $700,000 gain.
But by the end of March MPower still only had just over two months of funding left at its disposal, which in April was extended after Tag Private lifted the company's existing funding facilities by $500,000.
The group is also in the process of finalising an expected $500,000 sale of its Faraday Renewable Energy Project in Victoria.
Under the business sale agreement with Wollemi Energy Group and Wollemi Climate, MPower will receive $19 million in cash that will primarily be used to pay down its liabilities in full, leaving a cash surplus of $3.8 million. The purchase price is payable at completion, other than $2 million that is payable six months after the date of completion, subject to agreed terms.
MPower notes the implied surplus would represent net assets per share of 1.1 cents, which is a 37.5 per cent premium to the last trading price before the announcement.
Shares shot up 25 per cent in response to $0.01, but have since fallen to $0.007 - down 12.5 per cent in the day's trading.
"I am proud of the capability, track record and success of the MPower business in its journey to aggregate a leading portfolio of clean energy assets in Australia," says MPower chief executive officer Nathan Wise.
"MPower has achieved significant milestones in recent years with the backing of its shareholders and the support of its lenders.
"The scale of the future opportunity is very large and it has been challenging to secure project funding in a way that can deliver a sustainable and acceptable outcome to MPower shareholders."
The company notes it has undertaken an "extensive process" to secure capital from a party with "an appropriate risk appetite and alignment with the scale of the opportunity that MPower has created".
During that process Wollemi emerged as a suitable capital partner, and during negotiations it became clear to MPower's directors that the best outcome for shareholders would be an acquisition of the MPower platform.
"The time has come for the next phase of growth under new owners who can bring greater financial capacity," adds Wise.
"Wollemi’s strategic alignment, growth focus and energy transition expertise make it uniquely positioned to create future value through combining its investment expertise and financial resources with the skills, assets and opportunity that the MPower business brings."
The business sale is subject to a $400,000 break fee for MPower, which plans to hold a general meeting to vote on the proposal on 16 July with an intended transaction completion date of 12 August.
"Wollemi’s proposed acquisition of MPower’s renewable energy business is consistent with our strategy to deploy capital into opportunities where our flexible capital, industry knowledge and specialised scale-up expertise can accelerate the implementation of sustainable solutions at scale," a Wollemi spokesperson says.
"We’re excited to be acquiring this business and working with the MPower team to build a distributed energy platform in Australia."
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