KIBO ENERGY PLC - Kibo to Acquire 60% Interest in UK Power Project Development Company

Release Date: 15/08/2018 08:00
Code(s): KBO
 
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Kibo to Acquire 60% Interest in UK Power Project Development Company

Kibo Energy PLC (Incorporated in Ireland)
(Registration Number: 451931)
(External registration number: 2011/007371/10)
Share code on the JSE Limited: KBO
Share code on the AIM: KIBO
ISIN: IE00B97C0C31
(“Kibo” or “the Company”)

Dated: 15 August 2018

                                Kibo Energy PLC (‘Kibo’ or the ‘Company’)
               Kibo to Acquire 60% Interest in UK Power Project Development Company

Kibo Energy PLC (“Kibo” or the “Company”), the multi-asset, Africa focused, energy company, is pleased to
announce that it has signed a Memorandum of Understanding (“MOU”) for the acquisition (“the Acquisition”)
of a 60% equity interest in Mast Energy Developments (“MED”), a private UK registered company targeting
the development and operation of flexible power plants to service the Reserve Power generation market. Under
the terms of the MOU, the Company can acquire a 60% shareholding in MED for a consideration of £300,000
payable to existing MED shareholders (“the Sellers”) in new Kibo shares and a share of future project revenue
royalties, which will be reinvested in the Company in the short term to an amount of GBP 2.2 million. The full
summary terms of the MOU are described further under the Key Terms section below.

MED’s business strategy is to acquire and develop a portfolio of small scale power generation assets. Various
“shovel ready” sites have already been identified in the UK, capable of sustaining gas fired power generators
and ancillary structures from 20MW upwards. They have full planning permission and permitting in place, long
term lease agreements, grid & gas connection offers and positive feasibility studies, pertaining to technical and
commercial viability.

Kibo’s initial review of MED’s business plan indicates that its first asset under acquisition in the UK described
above can be up and running within 12 months, thus potentially providing revenue streams to Kibo in the short
term. Similar lead time periods from site acquisition to generator installation and power generation are indicated
for other projects of similar size in the UK. Financial modelling indicates projected IRRs of 13-16% and NPVs
of GBP 16 -19 million for the initial assets described above. MED is exploiting a growth niche market in the
UK for small scale Reserve Power generation to balance out the national grid at critical times.

In conjunction with the potential financial benefits for Kibo from the transaction, particularly the prospect of
near term revenue generation, it is envisaged that both parties will be able to utilise their knowledge and
expertise of the power industry to assist in the development of further energy projects both in the UK and Africa.
Kibo’s established portfolio of assets in southern Africa is focused on large scale energy projects and with the
addition of MED’s product offering, the Company will also be able to access and exploit a different, very
lucrative sector of the African power market.

The Acquisition is subject to the completion of a comprehensive due diligence by Kibo on MED and all
relevant/applicable regulatory and statutory approvals.
Key Terms of Proposed Acquisition:

        *Kibo to acquire 60% interest in MED for the following consideration:
                -£300,000 payable in new Kibo shares to the Sellers at an issue price which is the higher of
                  GBP 0.0525 per share or the volume weighted average price at which the shares of Kibo shall
                  have traded on AIM for 30 days immediately preceding the Completion Date;
                -Concurrent with the commencement of revenue generation from each small-scale power
                  project that MED may develop, Kibo shall pay MED 5% of its share of gross revenues from
                  each project (less gas and trading costs) to the Sellers on a monthly basis (“the Royalties”). The
                  Sellers will immediately use the Royalties’ proceeds to subscribe for new Kibo shares pro rata
                  to their shareholding in MED until the Sellers shall collectively have subscribed for new Kibo
                  shares with an aggregate issue price of GBP 2.2 million. The issue price in respect of each
                  monthly issue of new Kibo shares will be the higher of GBP0.0525 or the volume Weighted
                  Average Price (“VWAP”) at which the shares of Kibo shall have traded 30 days immediately
                  preceding the date of issue of the shares;
                 -Following the subscription by the Sellers for Kibo shares with an aggregate issue price of GBP
                  2.2 million from their Royalties:
                           -Kibo will continue to pay the Royalties to the Sellers through deductions from its
                            revenue streams from its interest in the individual projects SPVs; and
                           -Kibo shall have the option to acquire the Royalties from the Sellers for a consideration
                            equal to the then present value of the Royalties at a 6% discount rate provided this right
                            is exercised within a 30-day notice period from when the generating asset portfolio
                            reaches 100 MW of operating capacity. In the event that this option is not exercised,
                            Kibo will have further options to acquire the Royalties when the portfolio generating
                            capacity reaches 150MW, 200MW, 250MW and 300MW. In each case the terms of the
                            option will remain the same save that the option period will be extended to 60 days
                            from when the operating capacity reach each of the four capacity milestones noted.

          *Kibo and the Sellers shall grant each other the option to acquire (in the case of Kibo) or sell (in the
           case of MED) the remaining 40% of MED that Kibo does not hold within 60 days from when the
           generating asset portfolio reaches 150 MW at the market value of the 40% at that time. In the case of
           acquisition by Kibo, the consideration to the Sellers shall be in either in cash, new Kibo shares or a
           combination of both. If Kibo elects to settle fully or in part in new Kibo shares, the issue price shall be
           calculated as the VWAP at which Kibo shares have traded on AIM for the 30 days immediately
           preceding the issue of the shares. If the option is not exercised by either party, the parties shall have a
           further option to exercise when the portfolio generating capacity reaches 250 MW and 300 MW. In
           each case the terms of the option will remain the same save that the option period will be extended to
           90 days from when the operating capacity reaches each of the two milestones noted;
          *Kibo and the Sellers shall enter into a Shareholders’ Agreement that shall govern the operation of
           MED; and
          *Kibo shall have the right to appoint two non-executive and two executive directors to the MED Board
           while the Sellers shall have the right to appoint 2 executive directors and 1 non-executive director.
 

Louis Coetzee, CEO of Kibo Energy, said: “This proposed acquisition provides Kibo with exposure to near -
 term revenue generating assets and enables us to combine our knowledge of the power generation market both
 in mature and emerging markets. There is a distinct short-term revenue generating potential in the UK, which
 is positive for Kibo and importantly all early stage royalties payable to the sellers will be reinvested in Kibo.
 This prospect of receipt of gradually increasing revenue streams in the short term as MED builds generating
 capacity and the re-investment of royalties in the early stages of production will greatly assist the Company’s
 working capital requirements as it develops its rapidly expanding larger scale energy asset portfolio in Africa.
 Additionally, it creates a situation where we can expand our product offering and increase our exposure to
 different sectors of the African energy market.”

Darrel Krowitz, CEO of MAST Energy said “This acquisition not only provides an opportunity for MED to
augment the Kibo Energy portfolio with small scale power solutions for industry and national grid stability, in
southern Africa, but allows it to diversify into the UK’s flexible power markets which we believe will add short
and long-term value to Kibo shareholders. I look forward to working closely with the Kibo team as we execute
our project development strategy.”

                                             **ENDS**
 For further information please visit www.kibomining.com or contact:

  Louis Coetzee           info@kibomining.com        Kibo Energy PLC              Chief Executive Officer
  Andreas Lianos          +27 (0) 83 4408365         River Group                  Corporate and Designated
                                                                                  Adviser on JSE
  Ben Tadd /              +44 (0) 20 3700 0093       SVS Securities Limited       Joint Broker
  Tom Curran
 Jon Belliss            +44 (0) 20 7399 9400       Novum Securities Ltd        Joint Broker
 Andrew Thomson         +61 8 9480 2500            RFC Ambrian Limited         NOMAD on AIM

 Isabel de Salis / Priit +44 (0) 20 7236 1177      St Brides Partners Ltd      Investor and Media Relations
 Piip                                                                          Adviser

Notes to editors
Kibo Energy PLC is a multi-asset, Africa focussed, energy company positioned to address the acute power
deficit, which is one of the primary impediments to economic development in Sub-Saharan Africa. To this end,
it is the Company’s objective to become a leading independent power producer in the region.

Kibo is simultaneously developing three similar coal-fuelled power projects: the Mbeya Coal to Power Project
(‘MCPP’) in Tanzania; the Mabesekwa Coal Independent Power Project (‘MCIPP’) in Botswana; and the Benga
Independent Power Project (‘BIPP’) in Mozambique. By developing these projects in parallel, the Company
intends to leverage considerable economies of scale and timing in respect of strategic partnerships, procurement,
equipment, human capital, execution capability / capacity and project finance. Additionally, the Company will
benefit from its robust and experienced international blue-chip partnership network across its project portfolio,
which includes: SEPCO III (China), General Electric (USA); Tractebel Engineering (Belgium); Minxcon
Consulting (South Africa); ABSA / Barclays Africa; and Hogan Lovells International LLP.

Johannesburg
15 August 2018
Corporate and Designated Adviser
River Group

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