17th Jul 2014 11:27
LONDON (Alliance News) - Alkane Energy PLC Thursday said it has agreed to acquire three power response companies from Carron Energy Ltd and Dragon Generation Ltd for a total price of GBP12.1 million, and it has raised GBP8.0 million through a share placing.
The company, which produces power from methane produced in former coal mines, said the three companies are Darent Power Ltd, Leven Power Ltd and Rhymney Power Ltd, adding 49 megawatts of power response generating capacity to its portfolio of generating assets.
The company said the deal puts it in a strong position in the National Grid's Short Term Operating Reserve market where participants are paid premium rates during the year when called upon by the UK National Grid to meet temporary supply shortages.
Alkane Energy added that the deal will provide additional revenues from peak winter pricing at a time when the UK faces growing challenges related to declining generating capacity and possible power shortages.
The deal comprises GBP10.7 million payable in cash, along with the adoption of a roughly GBP1.1 million term loan facility with Lombard North Central PLC. In addition, GBP170,000 is payable as a debt-service agreement and GBP150,000 is payable as working capital payments.
Alkane said it has raised GBP8.0 million through the issuance of 22.2 million shares at a price of 36 pence per share.
The company said it plans to pay for the acquisitions through an extension of its existing bank facilities and the net proceeds of the placing. Any excess financing will be used to provide additional working capital to support further investment in its core gas to power activities.
Alkane Energy shares were down 5.8% to 37.20 pence on Thursday.
By Tom McIvor; [email protected]; @TomMcIvor1
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