TIDMMAST
RNS Number : 8288F
Mast Energy Developments PLC
12 July 2023
Mast Energy Developments PLC
(Incorporated in England and Wales)
(Registration Number: 12886458)
Share code on the LSE: MAST
ISIN: GB00BMBSCV12
('MED' or 'the Company')
Dated: 12 July 2023
Mast Energy Developments PLC ('MED' or 'the Company')
MED Announces Execution of Definitive and Binding Joint Venture
Agreement
Mast Energy Developments PLC, the UK-based multi-asset owner,
developer, and operator in the rapidly growing flexible power
market, is pleased to announce that further to its previous
announcement dated 18 May 2023, it has finalised and entered into a
first definitive and binding Joint Venture Agreement ('JVA') with
an institutional investor-led consortium (the 'Institutional
Investor'), led by Seira Capital Ltd ('Seira').
Under the JVA, the Institutional Investor will inject all
required investment capital into the Joint Venture ('JV'), with an
initial expected total investment value of c. GBP5.9m, with no
funding contribution required from MED.
The JVA also commits both parties , as set out in MED's
announcement dated 18 May 2023, to promptly finalise terms on a
second joint venture which would increase the envisaged total
investment value to c. GBP31m, with a total portfolio of low-carbon
flexible gas generation peaker plants with a total combined
generation output of up to c. 33 MW, to be developed and/or
acquired, constructed and in production and income generating under
the two joint ventures ('Secondary JVA'). Such terms are subject to
a Reverse-Takeover derogation clearance from the FCA, and MED is
not bound to enter into any agreement prior to such clearance
having been obtained. The derogation clearance has been granted
in-principle by the FCA, pending their guidance publication
expected shortly.
An overview of the key highlights and terms of the JVA and
Secondary JVA are provided below.
JVA Key Highlights
The key terms of the JV agreement comprise the following:
-- Institutional Investor will inject all required investment
capital into the JV with an initial expected total investment value
of c. GBP5.9m, rising to potentially c. GBP31m upon completion of
the Secondary JVA, (including repayment of MED past costs as
detailed below) , with no funding contribution required from
MED.
-- Institutional Investor holding 74.9% of the JV and MED
holding 25.1%, with the Institutional Investor recognising and
reimbursing to MED a portion of its actual historic project
acquisition and development related costs (the 'Cost Refund'), as
detailed below, and no requirement on MED to provide any further
funding.
-- MED have joint control of the JV SPV Board and full
operational control of the relevant sites' management and
operations.
-- The JVA will initially consist of one project with a
generation capacity of c. 9 MW that MED will provide to the JV, the
Institutional Investor will then pay MED c. GBP3.4m in terms of the
Cost Refund, and inject c. GBP2.5m into the JV SPV to cover future
capex on this project. Following the binding JVA that has now been
executed, exchange and completion is expected by 28 July 2023.
-- The Secondary JVA, is expected to consist of up to four
projects with a combined generation capacity of a minimum 17 MW and
up to 24 MW that MED will provide to the JV, the Institutional
Investor will then pay MED c. GBP3.8m in terms of the Cost Refund,
and inject c. GBP21.3m into the JV SPV to cover future capex on
these projects.
-- The Institutional Investor will receive a preferential
entitlement to 90% of the profit of the JV until the investment
provided has been recovered in full, at which point any
distribution of profits will return to the equity split.
-- Therefore, it is envisaged that MED will receive a c. 25%
stake in a portfolio of up to c. 33 MW of assets that are expected
to be fully funded, constructed and revenue generating within the
next 12 months.
-- In addition, the JV have granted MED a five-year management
services agreement ('MSA') and associated fee to manage the sites,
which will further bolster MED's share of income from the JV, and
calculated as GBP7,200 per MW per annum.
-- It is MED's intention and plan to use the bulk of the Cost
Refund from the JV investment tranches to further develop and
acquire projects that will be used within the JV, as well as
further bolster its own wholly owned portfolio of assets (outside
of the JV), by way of further development, construction and new
acquisitions.
Part Settlement of Loans
Further to the announcement dated 18 May 2023, MED has
previously granted senior fixed and floating security over its
assets by way of debenture, save to the extent that any relevant
MED Project SPV subsidiary companies that will be party to the
above referred JV agreement being considered by the Company will be
excluded, provided the monies due to the Institutional Lender from
the Company is reduced to the aggregate of GBP300k, which the
Company is permitted to do pursuant to the terms of the agreement
or otherwise waived by the Institutional Lender.
As such, MED has satisfied the Institutional Lender's
requirement in this regard, and the security has been released.
A part repayment of GBP800k to its majority shareholder, Kibo
Energy PLC ('Kibo') with regards to the shareholder loan owing.
Resultingly, this will reduce the total amount owing to Kibo to c.
GBP432k.
Arrangement Fee
MED has agreed to make a payment to Mr. Ajay Saldanha, a
director of Kibo, in relation to consulting fees with regards to
the JV transaction, based on a contractual agreements that were
entered into in February and June 2022 well before he joined the
Kibo Board, being 2.8% of the total investment value of Investment
Tranche 1, and 0.5% of the total investment value of Investment
Tranche 2 respectively, each due and payable upon completion of
each investment tranche.
Pieter Krügel, CEO of MED, commented: "We are very pleased to
have finalised and entered into this definitive and binding JVA
with the Institutional Investor consortium, led by Seira
Capital.
"In addition to MED's wholly-owned portfolio of assets, which we
will continue to grow in parallel, the JV provides the Company with
both a significant cash injection and stake in a portfolio of
assets totaling an expected 33 MW that will be fully funded,
constructed, in production and income-generating in the next 12
months. MED's share of income from the JV portfolio revenue, as
well as its 5-year MSA fee, will provide the Company with a crucial
long-term recurring income stream.
"The JV deal has been long in the making and follows a robust
investment due diligence and negotiation process, all of which MED
clearly passed with distinction. The willingness of the
Institutional Investor consortium to enter into the JVA with MED is
testament of their confidence in the Company's strategy and
long-term development plans to deliver flexible energy projects
that are commercially viable."
ENDS
This announcement contains inside information for the purposes
of the UK version of the Market Abuse Regulation (EU No. 596/2014)
as it forms part of United Kingdom domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('UK MAR'). Upon the
publication of this announcement, this inside information is now
considered to be in the public domain.
For further information please visit www.med.energy or
contact:
Pieter Krügel Info@med.energy Mast Energy CEO
Developments
PLC
Jon Belliss +44 (0)20 7399 9425 Novum Securities Corporate Broker
------------------------------ -------------------- -----------------
Zainab Slemang zainab@lifacommunications.com Lifa Communications Investor &
van Rijmenant Media Relations
Advisor
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END
JVESFEFEEEDSESW
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