Major move by KNR
"KONTROL ENERGY CORP. ENTERS INTO LETTER OF INTENT TO ACQUIRE UP TO 20 MEGAWATTS OF SOLAR ENERGY POWER GENERATION ASSETS UNDER THE ONTARIO FEED-IN TARIFF PROGRAM
Kontrol Energy Corp. has entered into a letter of intent (LOI) to acquire up to 20 megawatts (net) of solar power generation assets, consisting of multiple solar energy generation sites operating across Ontario, Canada. All sites are under long-term power purchase agreements (PPAs) with the government of Ontario feed-in tariff program as managed by the Independent Electricity System Operator (IESO). The IESO has an issuer credit rating of A and Aa2 from DBRS and Moody's, respectively. Combined, the solar energy generation sites produce approximately $10-million of annual recurring revenue and $7.5-million of annual recurring EBITDA (earnings before interest, taxes, depreciation and amortization). The approximate net distributable cash flow after all expenses is approximately $3-million per annum in recurring cash flows for the next 18 years.
The average duration of the PPAs for the combined solar energy power generation assets is approximately 18 years.
"The long-term PPAs associated with these assets will add recurring and contracted cash flows to our existing operating cash flows," said Paul Ghezzi, CEO of the Company. "The successful completion of this transaction will accelerate our ability to build shareholder value and pay dividends. Given Kontrol's management team's experience in operating solar energy power generation assets, as well as managing long-term PPAs and the ability to optimize value, these solar power generation assets represent a potentially strong addition to our existing operations."
The purchase price for the acquisition is $31 million, subject to working capital adjustments and other closing adjustments. Eighty percent of the total purchase price will be paid by issuing to the vendor units of Kontrol, each unit consisting of common share and one-quarter of a common share purchase warrant of Kontrol. The number of units issuable will be determined by dividing the portion of the purchase price payable in units by the volume weighted average price of such shares for the 75 days prior to closing of the acquisition. Each whole warrant partially comprising a unit will entitle the holder to purchase one Kontrol common share for a price of $2.50 for a period of up to three years. The remaining twenty percent balance of the purchase price will be paid in cash. A hold-back of up to $6 Million is contemplated for any adjustments that may be required.
The transaction is anticipated to close by July 31, 2017 subject to due diligence, regulatory approvals and satisfaction of closing conditions.
About Kontrol Energy Corp.
Kontrol Energy Corp. (CSE:KNR) is a leader in energy efficiency solutions and technology. Through a disciplined mergers and acquisition strategy, combined with organic growth, Kontrol Energy Corp. provides market-based energy solutions to our customers designed to reduce their overall cost of energy while providing a corresponding reduction in Green House Gas (GHG) emissions. "
