REG - Kibo Energy PLC - Kibo Subsidiary Announces Definitive & Binding JVA

Kibo EnergyAnnouncement

12/07/2023 13:30

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RNS Number : 8291F  Kibo Energy PLC  12 July 2023

Kibo Energy PLC (Incorporated in Ireland)

(Registration Number: 451931)

(External registration number: 2011/007371/10)

LEI Code: 635400WTCRIZB6TVGZ23

Share code on the JSE Limited: KBO

Share code on the AIM: KIBO

ISIN: IE00B97C0C31

('Kibo' or 'the Company')

 

Dated: 12 July 2023

 

Kibo Energy PLC ('Kibo' or the 'Company')

 

Kibo Subsidiary Announces Execution of Definitive and Binding Joint Venture
Agreement

 

Kibo Energy PLC (AIM: KIBO; AltX: KBO), the renewable-energy-focused
development company, announces today that its subsidiary Mast Energy
Developments ('MED'), a UK-based multi-asset operator in the rapidly growing
flexible power market, has finalised and entered into a definitive and binding
Joint Venture Agreement ('JVA') with an institutional investor-led consortium
(the 'Institutional Investor') led by Seira Capital Ltd ('Seira') as
previously announced in an MED RNS dated 18 May 2023.

 

Under the JVA, the Institutional Investor will inject all required capital
into the joint venture ('JV'), with an expected total investment value of c.
£31 million, with no funding contribution from MED. MED will provide the
required portfolio of low-carbon flexible gas generation peaker plants
totalling a combined generation output of up to c. 33 MW to be developed
and/or acquired within the next 12 months.

 

The full announcement can be viewed at med.energy
(https://med.energy/?page_id=3140) . The full text of the MED RNS follows:

 

-------------------------------------------

 

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. £5.9m, 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. £31m, 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. £5.9m,
rising to potentially c. £31m 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. £3.4m in terms of the Cost Refund, and inject
c. £2.5m 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. £3.8m
in terms of the Cost Refund, and inject c. £21.3m 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 £7,200 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 £300k, 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 £800k 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. £432k.

 

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 van Rijmenant  zainab@lifacommunications.com  Lifa Communications  Investor & Media Relations Advisor

 

This announcement contains inside information as stipulated under the Market
Abuse Regulations (EU) no. 596/2014.

**ENDS**

For further information please visit www.kibo.energy (http://www.kibo.energy/)
or contact:

 

 Louis Coetzee                 info@kibo.energy (mailto:info@kibo.energy)                            Kibo Energy PLC             Chief Executive Officer
 James Biddle                  +44 207 628 3396                                                      Beaumont Cornish Limited    Nominated Adviser

 Roland Cormish
 Claire Noyce                  +44 20 3764 2341                                                      Hybridan LLP                Joint Broker
 Damon Heath                   +44 207 186 9952                                                      Shard Capital Partners LLP  Joint Broker
 Zainab Slemang van Rijmenant  zainab@lifacommunications.com (mailto:zainab@lifacommunications.com)  Lifa Communications         Investor and Media Relations Consultant

 

Johannesburg

12 July 2023

Corporate and Designated Adviser

River Group

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