REG - Cindrigo Hldgs Ltd - Acquisition of Kaipola Energy & Danir Financing

Cindrigo HoldingsAnnouncement

09/04/2024 17:00

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RNS Number : 9149J  Cindrigo Holdings Limited  09 April 2024

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9 April 2024

 

 

Cindrigo Holdings Limited

('Cindrigo' or the 'Company')

Acquisition of Kaipola Energy, Finland, & Financing From Danir

 

Cindrigo (LSE:CINH) is pleased to announce that it has signed and exchanged a
Share Purchase Agreement with Amtroy OÜ (the "Seller") in respect of the
acquisition of the entire issued share capital of Kaipolan Energia OY
("Kaipola Energy"), a Finnish company and holder of a 50-year lease (the
"Lease") of a 110 MW Waste to Energy ("WTE") combined heat and power ("CHP")
plant located in Kaipola, Finland (the "Plant"), for a consideration of
€18.95 million, on materially the same terms as the Memorandum of
Understanding ("MOU") previously announced on 26 February 2024.

 

Funding of €1.5million in the form of a loan has been provided to Cindrigo
by Danir AB, the Company's largest shareholder, to facilitate the initial
phases of the project to prepare the Plant for commercial operations in Q4
2024.

 

Completion of the acquisition of Kaipola Energy is planned to be on or before
15 April 2024.

 

Background: The Plant is a 110MW WTE/CHP Plant (capable of generating 25 MW
electricity and 85MW steam) and was built and operated by UPM Kymmene
Corporation ("UPM") as an integral part of its paper mill complex in Kapiola
Finland. The current owner, Kapiola Green Port OY, a Finnish company who
acquired the entire industrial complex in conjunction with UPM's closure of
the papermill, has granted a Lease for the 110MW CHP Plant to Kaipola Energy.
The Lease comprises the land, buildings and equipment required to operate the
Plant.

 

Purchase Price: The consideration of €18.95 million for 100% of the issued
share capital of Kaipola Energy is made up of:

·      €15 million in Cindrigo shares, priced at €1.10 per share,
being 13,636,364 shares issued to the Seller at Completion;

·      €100,000 in cash to be paid 45 days after Completion; and

·      A deferred payment of €3.85 million in cash, payable upon the
earlier of commencement of commercial operations, or 12 months after
Completion.

·      A potential earn-out of up to €3 million, subject to meeting
EBITDA performance targets within the initial three years after commercial
operations commence.

·      The total investment (Purchase Price plus repair) for Cindrigo is
expected to be approximately €210,000 per MW.

 

Revenue Projection: Based on current pricing and operational forecasts, the
Plant, upon reaching full operational capacity, has the potential to generate
revenues of approximately €40 million annually, with EBITDA of c.€10
million.

 

It is expected that commercial operations will commence in Q4 2024, and the
first-year initial revenues are estimated to be approximately €15 million.

 

Lease Overview: Kaipola Green Port OY has granted Kaipola Energy a Lease
covering the land, buildings, and equipment essential for the full operation
of the Plant. Lease rent is €30,000 per month for the facility from the
commencement of commercial operations, with potential increases up to
€70,000 per month, dependent upon output performance.  Cindrigo has agreed
to undertake and pay for works of repair and improvements to the Plant with
the estimated cost of up to €3 million.

 

Financing: Danir AB is providing the Company with a €1.5 million loan at an
interest rate of 10% per annum to ensure the seamless execution of the
acquisition and the immediate commencement of upgrade work of the Plant in
order to shorten the period to the commencement of commercial operations. In
recognition of Danir's exposure to risk at this early stage of the project,
Cindrigo has agreed to grant Danir a 10% stake in Kaipola Energy. Cindrigo is
committed to refinancing or repaying the loan through external capital sources
and cashflows generated by the Plant.

 

The Company will need to raise an additional circa €5 million to cover the
full upgrade of the Plant and fund the deferred consideration payment.

 

Commenting on the acquisition, Cindrigo's CEO, Lars Guldstrand, said: "This
acquisition marks a significant milestone for Cindrigo as we strengthen our
presence in the renewable energy sector. The Kaipola facility represents a
valuable asset and significant addition to our portfolio. It also underscores
and enhances our capacity to deliver sustainable energy solutions to drive
positive change.

 

"The Kapiola facility will also be an excellent financial addition to the
Company with early income generation expected this year. This transaction
aligns with Cindrigo's long stated aim to develop a significant presence in
the renewable energy sector through both geothermal and waste to energy
projects and supports green domestic energy resources and production."

 

**ENDS**

 

For more information please contact:

 

 Cindrigo Holdings Limited

 Lars Guldstrand CEO                                               +44 (0) 7408 861 667
 Hannam & Partners (Financial Advisor & Corporate Broker)

 Samuel Merlin, Sean Urquhart                                      +44 (0) 20 7907 8500
 St Brides Partners Ltd (PR)                                       +44 (0) 20 7236 1177

 Paul Dulieu                                                       cindrigo@stbridespartners.co.uk

 

 

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