TIDMEAAS
RNS Number : 6674C
eEnergy Group PLC
22 June 2021
22 June 2021
eEnergy Group plc
("eEnergy" or "the Group")
Further investment in Smart Metering Business
eEnergy Group plc (AIM: EAAS), a leading "Energy
Efficiency-as-a-Service" (EEaaS) business in the UK and Ireland, is
pleased to announce that it has entered into various agreements
with the other existing shareholders of eEnergy Insights Ltd
("EIL") (a recently formed specialist smart metering measurement
equipment and analytics business) and EIL (the "Agreements"). The
Agreements follow the original investment of 19 April 2021 and will
increase the Group's equity interest in EIL from 33 per cent. to
37.5 per cent. and the Group will become the exclusive distribution
partner, with the potential to increase its interest to 100 per
cent. over time.
Background
On 19 April 2021, eEnergy announced that it had made an initial
investment in EIL in the form of loan notes, as well as a nominal
equity investment, resulting in eEnergy holding a 33 per cent.
equity interest in EIL.
It also announced that EIL had acquired certain trade assets out
of the administration process of Measure My Energy Limited and
certain associated intellectual property assets (the
"Acquisition").
The new Agreements contain the detailed terms agreed between the
parties in connection with the development of the new business
which the Board believes will allow the EIL business to grow, with
shareholders and management sufficiently incentivised, while
providing eEnergy the opportunity to increase its interest in EIL
over time up to 100 per cent. of the issued share capital.
Highlights
Highlights of the Agreements include:
-- The grant to eEnergy of exclusive, global distribution rights
for EIL's products, including its measuring equipment and analytics
offering, providing the opportunity for eEnergy to sell this
valuable and differentiated proposition into existing and new
customers. EIL retains the ability to sell its products in markets
where such sales do not directly compete with eEnergy;
-- Further investment by eEnergy and other shareholders. eEnergy
will invest loan notes of GBP61,250 and a nominal equity
investment, which will see eEnergy's equity interest in EIL
increase to 37.5 per cent. Other Shareholders will invest a total
of GBP208,500 in new loan notes, as well as nominal equity
investments;
-- Grant of a nominal-cost Warrant to eEnergy to increase its
equity interest in EIL to 51 per cent., which may be exercised
during a period beginning on the later of (i) the date that eEnergy
has reached minimum cumulative orders of EIL products and (ii) 1
July 2021;
-- Grant of a Call Option to eEnergy allowing it to increase its
equity interest in EIL to 100 percent. on pre-agreed valuation
metrics, exercisable three to five years from the date of the
Agreements, at the sole discretion of eEnergy;
-- Grant of a Put Option on pre-agreed valuation metrics, with
restrictions on the maximum amount payable, to the other
shareholders of EIL providing them with a potential exit
opportunity. The Put Option is exercisable by certain shareholders
three to five years from the date of the Agreements, and by other
shareholders from the fifth anniversary of the date of the
Agreement and for a period of six months thereafter.
eEnergy's Smart Metering Offering
eEnergy is seeking to unlock the potential of energy analytics
through proprietary smart metering "behind the meter" hardware and
software. Energy measurement and monitoring is a key growth pillar
of eEnergy's energy management platform that will seek to deliver
measured share of savings contracts and accelerate the transition
from Light-as-a-Service into Energy-as-a-Service.
The Agreements provide an opportunity to use key data insights
captured by the platform to enable eEnergy to deliver additional
energy conservation measures through the integration of the
Internet of Things (IOT) and smart controls.
Group Outlook
The Group continues to make progress with new customer wins, as
well as increasing its offering to customers from energy efficiency
through to energy management. The Board continues to expect the
Group to achieve a breakeven profit before exceptional items for
the full year to 30 June 2021.
A detailed trading update is expected to be published in early
July.
Harvey Sinclair, CEO, eEnergy, commented:
"Following our initial investment into smart metering through
EIL, we are excited to have formalised a longer-term agreement with
the EIL shareholders which enables us to provide customer
validation of energy efficiency savings behind the meter.
"These new Agreements are structured to incentivise the key
stakeholders, while providing routes for eEnergy to take its
interest in EIL up to 100 per cent. over the medium term.
"We see the agreement with EIL as an exciting opportunity to
establish an offering in smart metering and will look to provide
cross-sell opportunities to existing and new customers of our
light-as-a-service and energy procurement platform."
Details of the Agreements
Distribution Agreement
eEnergy has entered into a distribution agreement with EIL
("Distribution Agreement"), where EIL has granted eEnergy the
exclusive, global distribution rights to all its products, save for
in markets where such sales do not directly compete with
eEnergy.
The Distribution Agreement sets out the commercial terms between
the parties.
Further Investment by eEnergy in EIL
Pursuant to the Agreements, eEnergy will make a further cash
investment of GBP61,250 into EIL in the form of loan notes, as well
as a further nominal equity investment in EIL, resulting in
eEnergy's equity interest in EIL increasing to 37.5 per cent.
Certain shareholders will invest further cash into EIL
comprising a total of GBP208,500 in new loan notes, while all
shareholders will invest in nominal equity investments alongside
eEnergy.
In the event that certain commercial criteria for a next
generation of distribution monitors are not achieved by 18 October
2021, then claw back provisions may apply, where eEnergy's equity
interest could increase up to 51 per cent.
The book value of the assets of EIL pursuant to the Agreements
was GBP0.2m, representing the value of the consideration to fund
the Acquisition.
Issue of Warrants in EIL to eEnergy
eEnergy will be granted nominal-cost warrants (the "Warrants"),
allowing the Group to increase its equity interest to 51 per cent.
of the issued share capital of EIL. The Warrants are exercisable
for a period of 12 months beginning on the later of (i) 1 July 2021
and (ii) the date that eEnergy reaches minimum cumulative orders of
power distribution monitors or power meters.
Issue of eEnergy shares
In order to align certain existing investors in EIL ("EIL
Investors") with the eEnergy strategy, upon confirmation of EIL's
next generation of distribution monitors achieving the desired
commercial criteria, GBP138,000 of the loan notes held by such
investors will be converted into an equivalent amount of Ordinary
Shares in eEnergy at an issue price equivalent to the 30 day VWAP
at the time. A further announcement will be made in the event of
completion of such transaction.
Issue of options over eEnergy ordinary shares
In order to have in place appropriate incentives for the EIL
management, eEnergy will issue to management a total of 2,000,000
options of ordinary shares of 0.3p in the Company ("Ordinary
Shares"), with an exercise price equal to the 30 day VWAP prior to
specific performance criteria being satisfied, (together, the
"Share Options"). The Share Options will be issued on achieving the
desired commercial criteria and are exercisable on the earlier of
four years from eEnergy's initial investment (being 18 April 2021),
or a change of control of eEnergy and would be subject to orderly
market restrictions. Assuming full exercise, the Share Options
would represent 0.8 per cent. of the issued share capital of
eEnergy, as enlarged by the Share Options.
EIL Board
As part of the Agreements, the board of EIL will contain up to
five members, with eEnergy having a right to appoint two members
and with a casting vote. Upon exercise of the Warrants by eEnergy,
the Board will contain up to six members, with eEnergy having a
right to appoint three members and with a casting vote.
Drag and Tag Provisions
The Agreements contain drag along and tag along provisions that
apply from the third anniversary of the Agreements, where 60 per
cent. or more of shareholders for the drag along and 51 per cent.
or more of shareholders for the tag along, have agreed to sell
their shares in EIL to a purchaser.
Obligatory Transfer Events
In the event that any shareholder of EIL becomes insolvent (as a
corporate entity or an individual) or commits a material or
persistent breach of certain provisions of the Agreements and, if
capable of remedy, is not remedied within 20 business days, there
can be an obligatory transfer of those shares in EIL to other
shareholder(s) at the Board's determination of fair value.
Call Option
In providing eEnergy with the flexibility to increase its equity
interest in EIL to 100 percent. over the medium term, the other
shareholders in EIL have granted to eEnergy a call option ("Call
Option"), to acquire all of the issued share capital not owned by
it, based on the higher of (i) an agreed fixed multiple of
annualised EBIT and (ii) an agreed multiple of Revenue, exercisable
between three to five years from the date of the Agreements.
eEnergy retains the discretion to exercise the Call Option. In
the event of exercise, the investors would receive cash
consideration and EIL management would receive either (i) cash
consideration, (ii) Ordinary Shares in eEnergy (at the 30 day VWAP
prior to exercise and subject to a 12 month lock-in and orderly
market provisions) or (iii) a combination thereof (at eEnergy's
discretion).
Put Option
In providing the other EIL shareholders with a potential
crystallisation opportunity in the medium term, the other EIL
shareholders ("Put Option Holders") have been granted a put option
("Put Option") to sell all their ordinary shares in EIL to eEnergy,
based on the higher of (i) an agreed fixed multiple of annualised
EBIT and (ii) an agreed multiple of Revenue, with exercise
restricted such that it would not trigger a reverse takeover
pursuant to Rule 14 of the AIM Rules for Companies. The Put Option
is exercisable by certain shareholders three to five years from the
date of the Agreements, and by other shareholders from the fifth
anniversary of the date of the Agreements and for a period of six
months thereafter. In the event of exercise, all EIL shareholders
selling their EIL shares to eEnergy would receive either (i) cash
consideration, (ii) Ordinary Shares in eEnergy, (at the 30 day VWAP
prior to exercise and subject to 12 month orderly market
provisions) or (iii) a combination thereof (at eEnergy's
discretion).
Contacts:
eEnergy Group plc Tel: +44 20 7078 9564
Harvey Sinclair, Chief Executive info@eenergyplc.com ;
Officer www.eenergyplc.com
Ric Williams, Chief Financial Officer
N+1 Singer (Nominated Adviser and Tel: +44 20 7496 3000
Joint Broker)
Justin McKeegan, Mark Taylor, Asha
Chotai (Corporate Finance)
Tom Salvesen (Corporate Broking)
Turner Pope Investments (Joint Broker) Tel: +44 20 3657 0050
Andy Thacker info@turnerpope.com
SECNewgate Tel: +44 7540 106 366
Robin Tozer eEnergy@secnewgate.co.uk
Isabelle Smurfit
About eEnergy Group plc
eEnergy Group plc is a leading "Energy Efficiency-as-a-Service"
(EEaaS) business focused on providing its core "Light-as-a-Service"
("LaaS"), to educational and commercial & industrial customers
through its eLight and RSL operations in the UK and Ireland. The
Group helps businesses and schools switch to LED lighting,
typically for a fixed monthly service fee, avoiding any upfront
payments.
eEnergy was admitted to AIM in January 2020. The Board's
strategy is to develop eEnergy as a broader energy services company
and acquire other businesses in the energy management sector. The
market in the EU for energy efficiency services was approximately
EUR25 billion in 2017 and is expected to double by 2025.
In December 2020, eEnergy completed the acquisition of Beond
Group Limited. Beond is a UK-based renewable energy consulting and
procurement business, whose services aim to reduce costs for
clients and tackle climate change. Beond's services include
provision of clean energy strategy, smart energy procurement,
hedging strategies, bill validation, bureau services and market
intelligence. However, its key offering is its proprietary platform
used to run reverse energy auctions for clients.
eEnergy has been awarded The Green Economy Mark by the London
Stock Exchange, which recognises a company's work on
sustainability.
https://eenergyplc.com/
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