TIDMPMG
RNS Number : 6340K
Parkmead Group (The) PLC
30 August 2019
30 August 2019
The Parkmead Group plc
("Parkmead", "the Company" or "the Group")
Parkmead expands into the renewable energy sector through
acquisition and related party transaction
Parkmead, the UK and Netherlands-focused group, with four
complementary business areas, is pleased to announce it has signed
a share purchase agreement to acquire the entire issued share
capital of Pitreadie Farm Limited ("Pitreadie"), a company owning
extensive farmland and sites in Scotland with significant renewable
energy potential (the "Acquisition").
HIGHLIGHTS
-- The consideration comprises GBP4.9 million payable in new Parkmead shares, alongside the adoption of an existing
GBP3.6 million loan from Bank of Scotland
-- The Acquisition provides Parkmead with significant renewable energy opportunities
-- Potential has been identified for the installation of numerous wind turbines, a solar farm and a biomass
production facility on the acquired land, totalling some 2,320 acres
-- One of the large acquired sites lies adjacent to a major operational wind farm and benefits from excellent
average wind speeds of between 7-10 m/s
-- The renewables sector is a natural expansion of Parkmead's energy operations and is fully in line with the
Group's strategy to increase the balance of Parkmead's portfolio
-- Acquisition broadens Parkmead's operations and will add a third revenue-generating business area to the Group
-- As a result of the Acquisition, the shareholding of Parkmead's Executive Chairman Tom Cross and his affiliates
will increase from approximately 19.05% to 25.97%
Summary of the Acquisition
The Acquisition comprises GBP4.9 million which will be entirely
satisfied by the issue of 9,645,669 new ordinary shares of 1.5
pence each ("Consideration Shares"). As part of the Acquisition,
Parkmead will also assume GBP3.6 million of Bank of Scotland debt
currently held by Pitreadie.
The Consideration Shares calculation is based on the closing
mid-market price per share of 50.8 pence on 29 August 2019, being
the last trading day prior to this announcement. The Consideration
Shares will be allocated, upon completion of the Acquisition, to
the repayment of a director's loan of GBP4.3 million, which has
been used to build and operate Pitreadie's asset base alongside the
Bank of Scotland loan, and an agreed consideration of GBP0.6
million for the equity shares in Pitreadie. Pitreadie generated a
revenue from farming operations of approximately GBP433,000 and an
overall pre-tax loss of approximately GBP166,000 during the year
ended 31 July 2019. This small loss reflects the investment in new
activities involved in the preparation for renewable energy
operations.
Pitreadie owns large areas of land spanning 2,320 acres in
Aberdeenshire, Scotland, which have clear, demonstrable potential
for the installation of renewable energy technologies. Specific
potential has been identified for the installation of numerous wind
turbines, a solar farm and a biomass production facility.
One of the large areas of land owned by Pitreadie spans 1,238
acres and is located some 15 miles west of Aberdeen. Excellent
average wind speeds exist on the site of between 7-10 m/s. This
site lies adjacent to the Mid Hill Wind Farm which contains 33
Siemens manufactured and maintained wind turbines. Woodland
planting has already been undertaken on part of this large site,
which has the potential for a commercial biomass supply operation.
Parkmead will be conducting a detailed analysis for optimising the
land use of the various sites within the Pitreadie portfolio.
The land and property assets alone, being acquired, assuming no
upside from renewable opportunities, were valued at GBP7.59 million
by CKD Galbraith LLP, a leading independent property consultancy.
As at 31 July 2019, the total assets of Pitreadie, including plant
machinery and stock, were valued at GBP8.64 million. The
Acquisition remains subject to the standard completion conditions
and a further announcement will be made in due course.
Strategic Rationale
Parkmead consists of four complementary business areas:
Netherlands Gas, UK Oil and Gas, Performance Benchmarking and
Economics, and Future Opportunities. The Future Opportunities area
of the Company, as stated in Parkmead's 2018 annual report, will
explore value-adding projects related to land, property and
renewable energies.
Parkmead recognises the transition that is taking place in the
energy market, supported by legislation, from fuels with a higher
carbon content to lower carbon alternatives such as natural gas and
renewables. Natural gas and renewables play key roles in the
generation of electricity.
In light of these important energy market factors, Parkmead
transitioned to a gas-only producer in January 2016 and the Group
has increased its gas production almost tenfold since 2014.
Parkmead remains of the strong belief that oil and gas will have
a very important role to play in the energy mix in future years.
This is evidenced by a range of forecasts showing robust and
increased demand for oil and gas going forward.
In consideration of the above, the Group believes that now is
the optimum time to broaden Parkmead's low-cost, low-carbon
operations. The renewables sector is a natural expansion of
Parkmead's operations and is fully in line with the Group's
strategy to increase the balance of Parkmead's portfolio.
The Acquisition broadens Parkmead's asset base and positions the
company to build a third revenue-generating business area for the
Group, in line with Parkmead's strategy of building growth through
balanced operations.
Related Party Transaction
The Acquisition constitutes a related party transaction under
Rule 13 of the AIM Rules as Linda Cross, wife of Tom Cross, owns
75% of the shares of Pitreadie and has a director loan of GBP4.3
million with Pitreadie which will be settled in ordinary shares as
part of the Acquisition.
The directors of Parkmead (excluding Tom Cross) consider, having
consulted with Arden Partners plc in its capacity as the Company's
nominated adviser for the purposes of the AIM Rules, that the terms
of the Acquisition are fair and reasonable insofar as the Company's
shareholders are concerned.
Issue of Equity
Application will be made to the London Stock Exchange for the
Consideration Shares to be admitted to trading on AIM upon
completion, which is expected to occur no later than 26 September
2019, and a further announcement will be made in due course. The
Consideration Shares will rank pari passu in all respects with the
Company's existing ordinary shares.
Post Admission, Tom Cross and his affiliates will hold
28,201,172 ordinary shares of 1.5 pence each ("Ordinary Shares") in
the Company, which will represent 25.97 per cent. of the enlarged
issued share capital. Kevan Smith holds the remaining 25% of
Pitreadie and will join the Tom Cross and affiliates concert party
by virtue of receiving 295,276 ordinary shares as consideration for
his holding in Pitreadie, therefore the concert party will hold
28,496,448 ordinary shares in Parkmead, representing 26.25 per
cent. of the Company's issued share capital.
Total Voting Rights
Following Admission, the issued share capital of the Company
will consist of 108,574,829 Ordinary Shares, with one voting right
per share. The Company does not hold any Ordinary Shares in
treasury. Therefore, the total number of Ordinary Shares and voting
rights in the Company will be 108,574,829.
The above figure may be used by shareholders in the Company as
the denominator for the calculations by which they will determine
if they are required to notify their interest in, or a change to
their interest in, the share capital of the Company under the FCA's
Disclosure Guidance and Transparency Rules.
Parkmead's Independent Non-Executive Directors, Philip Dayer and
Iain Rawlinson, commented:
"This acquisition is directly in line with Parkmead's strategy.
It positions the Group very well for balanced growth by making a
first step into the renewables sector. These assets have
significant onshore wind energy potential.
There is an active market for land assets in Scotland,
particularly those with renewable energy potential."
Parkmead's Chief Financial Officer, Ryan Stroulger,
commented:
"We are delighted to have secured this exciting opportunity in
line with Parkmead's strategy. The acquisition strengthens the
Group by adding quality assets with very significant renewable
energy potential.
Renewable energy is an area of major opportunity for us and,
with our strong in-house technical and commercial expertise,
Parkmead is very well positioned to benefit from this
acquisition.
The acquisition is complementary to Parkmead's other business
areas, broadening and enhancing the Group's asset base and revenue
stream.
The team at Parkmead is working intensively to evaluate and
execute further value-adding opportunities, which could provide
additional upside to the Company."
For enquiries please contact:
The Parkmead Group plc
Tom Cross (Executive Chairman)
Ryan Stroulger (Chief Financial Officer)
Arden Partners plc (Financial Adviser, NOMAD and Corporate
Broker to Parkmead)
Ciaran Walsh - Corporate Finance
Tim Dainton - Equity Sales
Instinctif Partners Limited (PR Adviser to Parkmead)
David Simonson
Sarah Hourahane
Dinara Shikhametova
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END
ACQUKSURKVAWUUR
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