- $9.2 million in revenue for
SFF calendar year 2023; $9.4 million
in revenue for SFF calendar year 2022
- 50.76 MW combined capacity of SFF and SolarBank independent
power producer ("IPP") assets (32 MW operating and 18.76 MW under
construction)
- 28.8 megawatts ("MW") combined capacity from over a total of
70 operating solar sites located in Ontario under long term contracts with the
Ontario IESO are owned by SFF
- 14.97 MW aggregate discharge capacity from three battery
energy storage system projects that are under construction by SFF
In Ontario that are expected to operate under long term guaranteed
capacity contracts from the Ontario IESO
This news release constitutes a "designated
news release" for the purposes of the Company's prospectus
supplement dated May 23, 2024 to its
short form base shelf prospectus dated May
2, 2023
TORONTO, July 8, 2024
/PRNewswire/ - SolarBank Corporation (Nasdaq: SUUN) (Cboe
CA: SUNN) (FSE: GY2) ("SolarBank" or the "Company") is
pleased to announce today that it has closed its acquisition of
Solar Flow-Through Funds Ltd. ("SFF" or "Solar
Flow-Through") valued at $45
million which includes SFF's over 70 operating solar sites
located in Ontario and recurring
operating revenues which were $9.2
million in revenue for SFF calendar year 2023 and
$9.4 million in revenue for SFF
calendar year 2022. The transaction involved the acquisition
of all of the issued and outstanding common shares of SFF
through a plan of arrangement in an all stock deal (the
"Transaction"). The Transaction values SFF at up to
$45 million but the consideration
paid excludes the common shares of SFF currently held by SolarBank.
The Transaction was completed pursuant to the terms of an
arrangement agreement (the "Agreement") between the Company
and SFF.
Under the terms of the Transaction, SolarBank has agreed to
issue up to 5,859,561 common shares of SolarBank ("SolarBank
Shares") for an aggregate purchase price of up to $41.8 million, representing $4.50 per SFF common share acquired. The number
of SolarBank Shares was determined using a 90 trading day volume
weighted average trading price as of the date of the Agreement
which is equal to $7.14 (the
"Agreement Date VWAP"). The Transaction represents a 7%
premium to a valuation report prepared by Evans & Evans, Inc.
on SFF and its assets. Through the Transaction, SolarBank will
acquire SFF's 70 operating solar power sites, along with its
pipeline of battery energy storage projects ("BESS") and
electric vehicle charging stations.
Image above presents Solar Flow-Through Funds' 70 solar
photovoltaic generation projects totalling 28.8 MW DC. The projects
operate under the Ontario FIT program.
The consideration for the Transaction consists of an upfront
payment of approximately 3,575,632 SolarBank Shares ($25.53 million) that were issued on closing and a
contingent payment representing up to an additional 2,283,929
SolarBank Shares ($16.31 million)
that were issued in the form of contingent value rights
("CVRs"). The SolarBank Shares underlying the CVRs will be
issued once the final contract pricing terms have been determined
between SFF, the Ontario Independent Electricity System Operator
("IESO") and the major suppliers for the SFF BESS portfolio
and the binding terms of the debt financing for the BESS portfolio
have been agreed (the "CVR Conditions"). On satisfaction of
the CVR Conditions, Evans & Evans, Inc. shall revalue the BESS
portfolio and SolarBank shall then issue SolarBank Shares having an
aggregate value that is equal to the lesser of (i) $16.31 million and (ii) the final valuation of
the BESS portfolio determined by Evans & Evans, Inc. plus the
sale proceeds of any portion of the BESS portfolio that may be
sold, in either case divided by the Agreement Date VWAP. The
maximum number of additional shares issued for the CVRs will be
2,283,929 SolarBank Shares.
Highlights and Benefits of the Transaction:
- Continues SolarBank's strategy of creating value for all
stakeholders by growing its portfolio of cash generating
independent power producer assets.
- 28.8 MW of long life assets that have favorable feed in
tariff rates into the 2030s.
- Expansion into ownership of battery energy storage projects
(14.97 MW) and electric vehicle charging stations – both key
components of the net zero energy transition.
- All stock transaction preserves cash for continued funding
of the Company's development pipeline.
Dr. Richard Lu, President
& CEO of SolarBank commented: "I am very pleased that
SolarBank has closed this acquisition which significantly increases
our portfolio of high-quality cash-generating independent power
producer assets. SolarBank is going to continue to target further
growth of its independent power producer assets through organic
project origination and strategic acquisitions of assets. We look
forward to integrating the Solar Flow-Though assets and teams into
SolarBank's operations."
Matt Wayrynen, CEO of Solar
Flow-Through commented: "Solar Flow-Through has been working
closely with SolarBank for over a decade now. We look forward to
aligning our efforts toward a shared mission of expanding and
diversifying the SolarBank portfolio, increasing long-term
shareholder value and contributing to a sustainable future. We
would like to thank the investors of Solar Flow-Through for their
support throughout this process and entrusting SolarBank's
management and board to guide the growth of the portfolio moving
forward."
Agreement details and timing
The Transaction was carried out by way of a court-approved plan
of arrangement under the Business Corporations Act
(British Columbia) and the
transaction was approved at a special meeting held on June 19, 2024 (the "SFF Meeting") by: (i)
99.50% of the votes cast by the SFF common shareholders and holders
of SFF tracking shares (the "SFF Tracking Shares") present
in person or represented by proxy, voting together as a single
class; (ii) 99.62% of the votes cast by SFF common shareholders
present in person or represented by proxy, voting together as a
separate class; and (iii) 98.75% of the votes cast by holders of
SFF Tracking Shares present in person or represented by proxy,
voting together as one separate class.
There are three classes of SFF Tracking Shares. Each class of
SFF Tracking Shares is linked to a separate lawsuit where SFF, as
plaintiff, is seeking to recover damages for the termination of
certain solar power project development contracts. If the lawsuit
that is linked to a class of SFF Tracking Shares is successful, the
shareholder of such SFF Tracking Shares will have the option to
receive its pro-rata share of the net settlement award or to
convert such amount into SolarBank Shares.
Under the terms of the Transaction, SFF shareholders received
consideration of (i) $25.53 million,
representing approximately $2.75 per
SFF common share or 0.3845938 of a SolarBank Share for every SFF
common share on closing; and (ii) up to $16.31 million in CVRs that may, on satisfaction
of the CVR Conditions, be exchanged for SolarBank Shares
representing up to approximately $1.75 per SFF common share or up to 0.2456582 of
a SolarBank Share for every SFF common share.
All SolarBank Shares issued in the Transaction, including
SolarBank Shares issued on conversion of the CVRs or SFF Tracking
Shares, if any, are subject to transfer restrictions pursuant to a
release schedule as set forth in the table below:
Release
Date
|
Percentage
|
Closing
|
0 %
|
6 Months from
Closing
|
5 %
|
12 Months from
Closing
|
5 %
|
18 Months from
Closing
|
5 %
|
24 Months from
Closing
|
5 %
|
27 Months from
Closing
|
20 %
|
30 Months from
Closing
|
20 %
|
33 Months from
Closing
|
20 %
|
36 Months from
Closing
|
20 %
|
Evans & Evans, Inc. has provided a fairness opinion to the
Board of Directors of SFF stating that, as of the date of such
opinion, and based upon and subject to the assumptions, limitations
and qualifications stated in such opinion, the consideration to be
received by SFF shareholders under the Transaction is fair, from a
financial point of view, to SFF shareholders.
In connection with the closing of the Transaction, Mr.
Matthew Wayrynen, the current CEO of
SFF, has been appointed to the Board of Directors of the Company
and Mr. Olen Aasen has resigned as a
board member but remains as General Counsel to the Company.
The Company expects to pay an advisory fee in connection with
the closing of the Transaction.
Details regarding the other terms of the Transaction are set out
in the Agreement, which is available on SEDAR+ at
www.sedarplus.com.
Unless otherwise indicated all dollar values in this news
release are in Canadian dollars.
None of the securities to be issued pursuant to the Agreement
have been or will be registered under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act"), or any state
securities laws, and any securities issued in connection with the
Transaction are anticipated to be issued in reliance upon available
exemptions from such registration requirements pursuant to Sections
3(a)(9) and 3(a)(10) of the U.S. Securities Act, as applicable, and
applicable exemptions under state securities laws. This news
release does not constitute an offer to sell or the solicitation of
an offer to buy any securities.
About SolarBank Corporation
SolarBank Corporation is an independent renewable and clean
energy project developer and owner focusing on distributed and
community solar projects in Canada
and the USA. The Company develops
solar projects that sell electricity to utilities, commercial,
industrial, municipal and residential off-takers. The Company
maximizes returns via a diverse portfolio of projects across
multiple leading solar markets including projects with utilities,
host off-takers, community solar, and virtual net metering
projects. The Company has a potential development pipeline of over
one gigawatt and has developed renewable and clean energy projects
with a combined capacity of over 70 megawatts built. To learn more
about SolarBank, please visit www.solarbankcorp.com.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements and
forward-looking information within the meaning of Canadian
securities legislation (collectively, "forward-looking
statements") that relate to the Company's current expectations
and views of future events. Any statements that express, or
involve discussions as to, expectations, beliefs, plans,
objectives, assumptions or future events or performance (often,
but not always, through the use of words or phrases such as "will
likely result", "are expected to", "expects", "will continue", "is
anticipated", "anticipates", "believes", "estimated", "intends",
"plans", "forecast", "projection", "strategy", "objective" and
"outlook") are not historical facts and may be forward-looking
statements and may involve estimates, assumptions and uncertainties
which could cause actual results or outcomes to differ materially
from those expressed in such forward-looking statements. In
particular and without limitation, this news release contains
forward-looking statements pertaining to: the settlement of terms
of the debt financing for the BESS portfolio, and such financing
proceeding; the availability and expected reliance on certain
exemptions from U.S. securities laws in connection with the
Transaction; the accuracy of management's assessment of the effects
and benefits of the successful completion of the proposed
Transaction; the continuation of favorable feed in tariff rates
into the 2030s; the Company's growth strategies; the expected
energy production from the projects mentioned in this press
release; the development pipeline, including the Company's
continued funding thereof; and the Company's integration of SFF
assets into the Company's operations, including the anticipated
benefits of such integration. No assurance can be given that these
expectations will prove to be correct and such forward-looking
statements included in this news release should not be unduly
relied upon. These statements speak only as of the date of this
news release.
Forward-looking statements are based on certain assumptions
and analyses made by the Company in light of the experience and
perception of historical trends, current conditions and expected
future developments and other factors it believes are appropriate,
and are subject to risks and uncertainties. In making the forward
looking statements included in this news release, the Company has
made various material assumptions, including but not limited to:
assumptions regarding the combined company following completion of
the Transaction; obtaining the necessary regulatory approvals for
the Company's other projects; that regulatory requirements will be
maintained; general business and economic conditions; the Company's
ability to successfully execute its plans and intentions; the
availability of financing on reasonable terms; the Company's
ability to attract and retain skilled staff; market competition;
the products and services offered by the Company's competitors;
that the Company's current good relationships with its service
providers and other third parties will be maintained; and
government subsidies and funding for renewable energy will continue
as currently contemplated. Although the Company believes that the
assumptions underlying these statements are reasonable, they may
prove to be incorrect, and the Company cannot assure that actual
results will be consistent with these forward-looking statements.
Given these risks, uncertainties and assumptions, investors should
not place undue reliance on these forward-looking statements.
Whether actual results, performance or achievements will conform
to the Company's expectations and predictions is subject to a
number of known and unknown risks, uncertainties, assumptions and
other factors, including those listed under "Forward-Looking
Statements" and "Risk Factors" in the Company's Annual Information
Form for the most recently completed financial year, and
other public filings of the Company, which include: risks
related to the successful integration of acquisitions; the Company
may be adversely affected by volatile solar power market and
industry conditions; the execution of the Company's growth strategy
depends upon the continued availability of third-party financing
arrangements; the Company's future success depends partly on its
ability to expand the pipeline of its energy business in several
key markets; governments may revise, reduce or eliminate incentives
and policy support schemes for solar and battery storage power;
general global economic conditions may have an adverse impact on
our operating performance and results of operations; the Company's
project development and construction activities may not be
successful; developing and operating solar projects exposes the
Company to various risks; the Company faces a number of risks
involving Power Purchase Agreements and project-level financing
arrangements; any changes to the laws, regulations and policies
that the Company is subject to may present technical, regulatory
and economic barriers to the purchase and use of solar power; the
markets in which the Company competes are highly competitive and
evolving quickly; an anti-circumvention investigation could
adversely affect the Company by potentially raising the prices of
key supplies for the construction of solar power projects; foreign
exchange rate fluctuations; a change in the Company's effective tax
rate can have a significant adverse impact on its business;
seasonal variations in demand linked to construction cycles and
weather conditions may influence the Company's results of
operations; the Company may be unable to generate sufficient cash
flows or have access to external financing; the Company may incur
substantial additional indebtedness in the future; the Company is
subject to risks from supply chain issues; risks related to
inflation; unexpected warranty expenses that may not be adequately
covered by the Company's insurance policies; if the Company is
unable to attract and retain key personnel, it may not be able to
compete effectively in the renewable energy market; there are a
limited number of purchasers of utility-scale quantities of
electricity; compliance with environmental laws and regulations can
be expensive; corporate responsibility may adversely impose
additional costs; the future impact of COVID-19 on the Company is
unknown at this time; the Company has limited insurance coverage;
the Company will be reliant on information technology systems and
may be subject to damaging cyberattacks; the Company may become
subject to litigation; there is no guarantee on how the Company
will use its available funds; the Company will continue to sell
securities for cash to fund operations, capital expansion, mergers
and acquisitions that will dilute the current shareholders; and
future dilution as a result of financings.
The Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise, except as may be required
by law. New factors emerge from time to time, and it is not
possible for the Company to predict all of them, or assess the
impact of each such factor or the extent to which any factor, or
combination of factors, may cause results to differ materially
from those contained in any forward-looking statement. Any
forward-looking statements contained in this news release are
expressly qualified in their entirety by this cautionary
statement.
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SOURCE SolarBank Corporation