REG - Molecular Energies - Potential Spin Out of GHC

Molecular EnergiesAnnouncement

28/06/2023 07:00

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RNS Number : 1179E  Molecular Energies PLC  28 June 2023

28 June 2023

 

Molecular Energies PLC

("Molecular" or the "Company")

 

Proposed spin-out and IPO of Green House Capital

 

 

Molecular Energies PLC (AIM: MEN), the international energy company, is
pleased to announce its intention to spin out and IPO its Green House Capital
alternative energies division ("Green House").

 

Highlights

·      Green House to spin out and IPO on AIM

o  Significant progress within Green House gives management confidence that
the Company will attract new energy focused investors and command a valuation
not recognised by being part of the Molecular Group

o  Advisors engaged with workstreams progressing

o  Advanced discussions with experienced and high-calibre management teams

·      Green House is in advanced negotiations to increase its stake in
Dual Fuel Limited ("DFL") from 50% to 100%

o  Green House is encouraged by the opportunity for DFL to be an important
transitional step to decarbonise heavy transport by retrofitting existing
heavy goods vehicles to run on a mix of hydrogen and diesel

o  Engineering on track for trials in the beginning of next year with first
revenues targeted in 2024

·      Aton 6 ("A6") has:

o  signed a Framework Co-operation Agreement with a subsidiary of the
diversified global financial service platform, Marex;

§ the agreement covers co-operation on all aspects of A6's carbon trading
business from advice and support in the registration of credits, through to
purchasing, trading, sales and marketing of the same;

o  signed a forward purchase agreement to acquire the carbon credits created
by the DFL business for a share of the future proceeds generated by the same;
and

o  reached advanced discussions to acquire an existing app-based trading
platform to be used for the carbon credits the business acquires

o  targeted commencement of revenue generation in 2024 from its app-based
trading platform

·    Green House has entered into a Framework Co-Operation Agreement with
Fortune-500 company, AECOM, to become its Owner's Engineer of choice for Green
House's various projects

 

Peter Levine, Chairman, commented:

 

"These are exciting times for Green House.  The next months will be
transformative including developing existing businesses, maturing the
opportunity pipeline as well as developing its own management and skills base.
In considering opportunities, we not only look at the subject matter but the
need for near-term revenue generation and prospects for monetisation of value.

 

"Green House is at an advantage as it can quickly mobilise a wide range of
expertise both within the Group and from outside as well as benefiting from
cross-fertilisation and trading within the Group businesses. The IPO, should
it progress as expected, will deliver further value for shareholders
complementing the added-value already achieved through Atome.

 

"We look forward to delivering further news during this summer and, in the
meantime, the hydrocarbon division of Molecular continues as set out in the
announcement of our Annual Report and Accounts 2022 issued today".

 

 

For further information, please visit www.molecularenergiesplc.com
(http://www.molecularenergiesplc.com) or contact:

 

 Molecular Energies PLC                      +44 (0)20 7016 7950

 Nikita Levine, Investor Relations           info@molecularenergiesplc.com (mailto:info@molecularenergiesplc.com)

 finnCap (Nominated Advisor and broker)      +44 (0)20 7220 0500

 Christopher Raggett, George Dollemore
 Tavistock (Financial PR & IR)               +44 (0)20 7920 3150

 Simon Hudson, Nick Elwes, Charles Baister

 

Notes to Editors

Molecular Energies PLC is an AIM listed company at the forefront of energy
development and has interests across the energy spectrum, from oil and gas
projects to subdivisions in the green and alternative energy sub-sectors.

 

The Company has oil and gas production in Argentina as well as exploration
assets in both Argentina and Paraguay. The Company has two separate
subdivisions which are focused on early-stage opportunities in the green
and/or alternative energy sub-sector.

 

Activities in the green and alternative energy space are being carried out
under the Green House Capital brand and through AIM listed Atome Energy PLC, a
green hydrogen, ammonia, and fertiliser company operating in Paraguay, Costa
Rica and Iceland, in which Molecular currently has 22.5%.

 

With a strong strategic and institutional base of support, an in-country
management team as well as the Chairman whose interests as the largest
shareholder are aligned to those of its shareholders, Molecular gives UK
investors access to an energy growth story combined with world class standards
of corporate governance, environmental and social responsibility.

PROPOSED SPIN OUT OF GREEN HOUSE

 

Following the success in identifying, financing and growing various green
energy businesses over the last 24 months, Molecular has initiated steps
towards spinning out this division into a new AIM Company in the latter part
of this year in order to unlock value for shareholders not currently reflected
by being part of the Molecular Group. This follows the foundation from scratch
and subsequent successful spin-out in late 2021 of the now Atome Energy PLC
("Atome"), with a current independent market capitalization of over US$50
million where Molecular retains a 22.5% interest.

 

The spin-out will expose Green House to a wider investor audience that is more
focused on the growing market for green solutions across industries, in a
similar manner to Atome. The Company has appointed nomad, brokers, reporting
accountants and lawyers and a significant amount of work has already taken
place.

 

Green House will employ a new management team, experienced in growth company
and new energy arenas. Green House has already identified and is in advanced
negotiations with suitable, high-calibre candidates. It is intended that each
of the diverse companies within Green House will have their own day-to-day
management and be run and developed as separate companies within the Green
House Group.

 

DUAL FUEL ("DFL")

Green House initially invested in DFL as a joint venture with G-Volution, a
leading dual fuel technology business. Work has been progressing well and is
still on course to have the first vehicle tested in Paraguay in the first part
of the new year with first revenues targeted in 2024.

 

Increasingly, dual fuel conversion of diesel engines to use a mix of hydrogen
and diesel is seen as an important transitionary step to decarbonise heavy
road transport. Trials will be conducted later this year in Paraguay which is
ideally located for this work with its strong links to the Molecular Group,
its reliance on heavy transport across long distances and availability of 24/7
baseload, low-cost renewable electricity in contrast with the materially
higher-cost UK and Europe. Moreover, Atome, Molecular's earlier spin-out will,
through its mobility division and in conjunction with DFL, be economically
supplying green hydrogen to provide the one-stop shop solution which is
essential in making a success of this type of business. In this, DFL is
currently selecting practical and moveable refueling systems rather than the
costly and uneconomic fixed sites in general purpose filling stations found in
Europe.

 

Significant interest has been shown in country on both a governmental and
industrial level with further announcements to expected next month. Paraguay
will be used as a test bed for further expansion initially projected into the
Mercosur countries.

 

In the light of the contemplated spin-out and IPO, Molecular is in advanced
discussions for DFL to become a 100% subsidiary of Green House with G-Volution
agreeing to provide the continuing engineering support and expertise as before
on terms being agreed.  It is expected that such agreement should be
completed in July, well before the contemplated IPO, in order to bring DFL
fully within the Group.

 

ATON 6 ("A6")

This business involves the origination, development, promotion, sales, and
marketing of carbon credits ("the Business"). A6, whose name derives from the
atomic number of carbon, 6, has been set up to be a complete cycle carbon
credit business from origination and development to wholesale purchasing of
existing carbon credits, registration, trading, and direct sales. A6 has now
entered into the following arrangements:

 

Spectron Services (part of Marex Group of Companies)

A6 has signed a Framework Co-operation Agreement with Spectron Services
Limited, part of the Marex Group of companies, in relation to the Business of
A6 including advisory services, assistance and support covering registration
and purchase of credits through to trading, sales, and marketing. Marex,
already active in the field of carbon offsets and trading, is a diversified
global financial services platform with 30 offices worldwide, providing
essential liquidity, market access and infrastructure services to clients in
the energy, commodities, and financial markets.

 

The agreement enables A6 to expedite its Business working with Spectron
Services for mutual benefit across the full range of the Business of A6.

 

A6 and Dual Fuel

A6 has entered into a forward purchasing agreement with DFL.

 

The agreement relates to the purchasing of carbon credits arising from the DFL
business, as referred to above. As part of such agreement A6 will work with
DFL to originate, fund, develop, register, and track the carbon credits
arising from the DFL Business, in consideration of which A6 and DFL will share
in the net sales proceeds as may be agreed between the parties.

 

It is currently considered that carbon credits available in due course would
come under the category of technology-based credits, the value and demand for
which are increasing.

 

Trading Platform

A6 is in advanced discussions to acquire an existing app-based trading
platform which has been developed privately but not yet put into operation.
On acquisition, the platform will be further developed and made fit for the
purpose of trading the credits both originated by A6 and also more immediately
through credits bought on the market directly or in co-operation with the
trading partners of A6. Like the Spectron Services agreement, the platform
will enable A6, at minimal cost, to have a head start, saving time in starting
from scratch. The target is to have the platform up and running and revenue
generating in the first part of 2024.

 

As well as using Molecular's contacts and experience in South America, A6 will
also benefit from the increasing portfolio of alternative energy businesses
within Green House to be able to offer "in Group" solutions for generating
quality carbon credits and forward funding for their business.

 

AECOM

Green House recognises that, in its growing stages, it will need an Owner's
Engineer/engineering consultant to advise not only on due diligence but also
in execution of relevant projects.

 

AECOM is a Fortune-500 engineering consultancy with US$13.1 billion of revenue
in 2022. It is already advising Atome in relation to both its heavy industrial
fertiliser project and mobility. AECOM have likewise been chosen by Green
House as its Owner's Engineer of choice for such projects as may be relevant
from time to time as it has both significant capacity and capability on an
international scale. Green House has now entered into a Framework Co-Operation
Agreement in this regard.

 

OTHER GREEN HOUSE BUSINESSES

Green House continues to assess other business opportunities with a very
strong pipeline of near term investments and partnerships. Some of these
opportunities it is hoped will mature before the end of the summer and prior
to the proposed IPO. Lithium extraction is one of these opportunities albeit
this is on a slower track than others.

 

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK Domestic Law by virtue of the
European Union (Withdrawal) Act 2018 ("UK MAR"). The person who arranged for
the release of this announcement on behalf of the Company was Peter Levine,
Chairman.

 

-ends-

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