Panda Green Energy Group Limited's Discloseable Transaction  Disposal of the Entire Issued Share Capital of a Subsidiary

Source Press Release
Company Greencoat Capital LLPPanda Green Energy Group Limited 
Tags Corporate Deals, Deals, Renewable Energy, Power
Date March 19, 2019

THE DISPOSAL

On 19 March 2019 (after trading hours), the Seller, an indirect wholly-owned subsidiary of the Company, entered into the Sale and Purchase Agreement with the Buyer, pursuant to which the Seller has agreed to sell, and the Buyer has agreed to buy, the Sale Shares, representing the entire issued share capital of the Target Company, at a consideration of GBP34,048,997.75. The Target Company owns six operational solar power plants with an aggregate installed capacity of approximately 82.5MW located in the UK. HSBC acted as the sole financial advisor to the Company.

Completion took place simultaneously with the signing of the Sale and Purchase Agreement. Upon Completion, the Target Company ceased to be a subsidiary of the Company and the financial results of the Target Group will no longer be consolidated to the financial statements of the Group.

LISTING RULES IMPLICATION

As some of the applicable percentage ratios in respect of the Sale and Purchase Agreement are more than 5% but less than 25%, the transaction contemplated under the Sale and PurchaseAgreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is subject to reporting and announcement requirements but is exempt from Shareholders’ approval requirement under the Listing Rules.

The Board is pleased to announce that on 19 March 2019 (after trading hours), the Seller, an indirect wholly owned subsidiary of the Company, entered into the Sale and Purchase Agreement with the Buyer in relation to the disposal of the Sale Shares, representing the entire issued share capital of the Target Company. The Target Company owns, via the Target Group, six operational solar powerplants with an aggregate installed capacity of approximately 82.5MW located in the UK. HSBC acted as the sole financial advisor to the Company.

THE SALE AND PURCHASE AGREEMENT

Date

19 March 2019

Parties to the Sale and Purchase Agreement

(a)the Seller; and

(b)the Buyer.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, as at the date of this announcement, the Buyer and its ultimate beneficial owner(s) are third parties independent of the Company and its connected persons.

Assets to be disposed of

Pursuant to the Sale and Purchase Agreement, the Buyer has agreed to buy, and the Seller has agreed to sell, the Sale Shares.

The Target Company indirectly via the Target Group owns a portfolio comprising six solar powerplants with an aggregate installed capacity of approximately 82.5MW located in the UK, all of which commenced operation in the first quarter of 2015

Consideration

Pursuant to the Sale and Purchase Agreement, the Consideration is GBP34,048,997.75, which will be payable by the Buyer to the Seller in the following manner:

(1)a sum of GBP 33,878,997.75 shall be paid to the Seller in cash on Completion; and

(2)a sum of GBP 170,000 shall be withheld by the Buyer as holdback funds to be paid out on the second anniversary of the Sale and Purchase Agreement, less, if applicable, such amounts of any Historical Debt which is paid by any Target Group Member or has been requested to be paid by the relevant creditor for such Historical Debt after Completion.

The Consideration was arrived at after arm’s length negotiations on normal commercial terms taking into considerations of prevailing market conditions, operational status of the Target Projects and financial position of the Target Group.

Completion

Completion took place simultaneously with the signing of the Sale and Purchase Agreement.

Upon Completion, the Target Company ceased to be a subsidiary of the Company and the financial results of the Target Group will no longer be consolidated to the financial statements of the Group.

INFORMATION OF THE TARGET GROUP

The Target Company is a private limited company incorporated in Luxembourg on 4 September 2014, and is principally engaged in investments in UK-based solar power plants. The Target Company, through six direct, wholly-owned subsidiaries incorporated in England and Wales, owns and operates the Target Projects. The Target Projects commenced commercial operation in the first quarter of 2015.

Set out below a summary of key financial data of the Target Group based on the unaudited financial statements for the two years ended 31 December 2017 and 31 December 2018 respectively:

For the year ended 31 December

2018 2017

(GBP’000) (GBP’000)

Profit/(Loss)  before taxation  1,367  (1,438) 
Profit/(Loss)  after taxation  1,016  (1,764) 

The unaudited net asset value of the Target Group as at 31 December 2018 was approximately GBP30,136,000.

INFORMATION ON THE BUYER

Greencoat Solar is a platform within Greencoat Capital LLP managing two funds (Greencoat Solar I LP and Greencoat Solar II LP) with in excess of £1.2 billion in commitments. Greencoat Solar owns and operates ground mount solar PV generation assets.

Greencoat Capital LLP is a specialist asset manager dedicated to the resource efficiency and renewable energy sectors. It has offices in London and Dublin and more than £3bn under management, making it one of the largest such fund managers in Europe. It was founded in 2009 and currently has fund mandates with segregated strategies in wind infrastructure, solar infrastructure and private equity.

INFORMATION ON THE GROUP

The Company is an investment holding company and operates its businesses through its subsidiaries. The Group is principally engaged in development, investment, operation and management of renewable energy power plants.

FINANCIAL EFFECTS OF THE DISPOSAL AND USE OF PROCEEDS

It is estimated that the Company would recognise a gain of approximately GBP1.8 million from the Disposal (subject to audit) being the difference between (i) the Consideration, (ii) the unaudited consolidated total net asset value of the Target Company as recorded in the Group’s financial statement as at the date of Completion; and (iii) the estimated expenses to be incurred from the Disposal. However, the calculations are only estimates provided for illustrative purposes. Shareholders should note that the actual amount of gain on the Disposal to be recorded by the Company will be subject to review by the auditors of the Company.

It is intended that the net proceeds will be used for repayment of indebtedness owed by the Group and general working capital of the Group.

REASONS FOR AND BENEFITS OF THE DISPOSAL

Given the operating environment of the solar energy industry in the UK and having considered the terms of the Sale and Purchase Agreement, the Board is of the view that the Disposal will be a good opportunity for the Group to realise its investment in the Target Group, and will improve the liquidity and deleveraging of the Group. The Disposal will enable the Group to free up capital for is operations and any potential new investment opportunities that can give a better return so as to enhance the shareholder value. The Board believes that the terms of the Disposal are fair and reasonable and in the interests of the Shareholders as a whole.

LISTING RULES IMPLICATION

As some of the applicable percentage ratios in respect of the Sale and Purchase Agreement are more than 5% but less than 25%, the transaction contemplated under the Sale and PurchaseAgreement constitutes a discloseable transaction of the Company under Chapter 14 of the Listing Rules and is subject to reporting and announcement requirements but is exempt from Shareholders’ approval requirements under the Listing Rules.

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd