Energy Made Clean to be acquired from Carnegie Clean Energy to create a regional leader. Acquisition to deliver scale and geographic expansion. 100% scrip acquisition. 11,000+ Carnegie shareholders to hold 32% of the combined group. Tag Pacific to be renamed MPower
Tag Pacific Limited is pleased to announce that it has signed an Implementation Deed for the acquisition of Energy Made Clean, a subsidiary business of Carnegie Clean Energy Limited (ASX: CCE). The acquisition capitalise s on the rapidly growing off – grid and fringe – of – grid solar, battery storage and microgrid market and will create a regional leader in the development, financing, Engineering, Procurement, Construction (EPC) and Build, Own, Operate (BOO) of renewables, batt ery storage and microgrids.
The expanded ASX – listed group, to be known as MPower, will hold a market leading position and will benefit from increased scale and enhanced national reach.
The purchase price for the Energy Made Clean business is to be satis fied by Tag issuing 58,507,377 new fully paid ordinary shares (“Tag Shares”) to Carnegie, which shares are to be distributed by Carnegie to the Carnegie shareholders by way of an in – specie distribution. Based on Tag’s issued share capital as at the date of this announcement, o n completion of the transaction, Carnegie’s 11,000+ shareholders will hold approximately 32% of the ordinary shares on issue in Tag Pacific . A capital raising is also planned by Tag Pacific around the time of completion of the transaction.
The EMC business will be fully integrated with Tag’s MPower business with head entity, Tag Pacific, to be renamed MPower at completion. Following complet ion of the transaction, Tag and Carnegie shareholders will hold a direct investment in an ASX – listed renewables and battery storage leader.
MPower and EMC would have had combined pro forma revenue in FY2018 in excess of $50 million. In line with market g rowth expectations, revenue of the enlarged group is expected to increase in FY2019 and beyond. The combined entity would start FY2019 with a combined committed order book of circa $20 million and once the MPower and EMC businesses are fully integrated, th e combined business is expected to have sufficient scale to enable profitability to be achieved.
In the case of Tag Pacific, in addition to any other ASX requirement, shareholder approval will be required for the purposes of ASX Listing Rule 7.1 , for the purpose s of item 7 of section 611 of the Corporations Act and a special resolution to approve the proposed change of name of Tag Pacific.
The combined business will integrate the engineering, procurement and construction activities of both existing busine sses under the MPower brand, maintaining their strong presence in New South Wales and Western Australia to deliver a national and regional capability. It will also integrate EMC’s solar and battery storage project development pipeline in order to establish a stand – alone build, own and operate solar and microgrid asset portfolio in the future.
Tag Pacific Chief Executive Officer, Nathan Wise, said:
“We are excited by the opportunity to bring together two leading renewable and battery storage businesses and to welcome Carnegie’s shareholders into our group.”
“The microgrid market is growing rapidly and consolidation in the sector is inevitable. The enlarged MPower business will be well placed to take a leadership position and dominate this market. We have p lans to grow the combined group rapidly across our EPC, Build Own and Operate (BOO) and Products divisions. We also plan to establish a dedicated vehicle to house our BOO solar and battery assets as they are developed.”
CEO and Managing Director of Carne gie Clean Energy, Dr Michael Ottaviano said:
“This is a compelling opportunity to unlock the significant potential from the microgrid market in Australia, New Zealand and the Pacific, bringing together two of the leading entities in Australia to create a national champion. ”
“A scrip based merger of EMC with MPower provides Carnegie Clean Energy shareholders with direct ownership of the microgrid specialist market leader and a strong financial platform for the 2019 financial year and beyond.”
The proposed transaction is subject to a number of conditions precedent including the approval of both Tag and CCE shareholders with Extraordinary General Meetings expected to be held in August. It is also subject to the novation of existing key contracts .
The ASX – listed MPower will be led by current Tag Pacific CEO, Nathan Wise, with a Board and Management team combined from each business. As the first step in a board renewal process, Tag would invite CCE to nominate two directors to join the MPower board from completion of the proposed transaction.
Key transaction terms agreed in the Implementation Deed:100% scrip – based transaction
68% Tag, 32% CCE of the enlarged MPower
11,000+ CCE shareholders to receive a direct investment in MPower via an in – specie distribution of the Tag S hares , subject to approv al by CCE shareholders and Tag shareholdersCompletion of the transaction is subject to the following conditions precedent, amongst others:
– the execution of binding legal documents;
– CCE and TAG sh areholder approvals; third party consents;
– Tag Pacific raising or receiving binding commitments to raise $4 million ; and
– no person acquiring a relevant interest in more than 15% of the voting power in CCE.
– Targeting completion by 31 August 2018
– Two CCE directors to be invited to join the MPower Board