Solar energy provider Solar Alliance Energy Inc. signed a non-binding letter of intent on May 16 to acquire an unnamed Canadian commercial and utility solar company for $6 million.
The unnamed solar company is based in Alberta with a year-to-date unaudited 2023 fiscal year revenue of $5,801,023 and future contracted projects totaling more than $5.6 million.
The transaction is primarily share-based and consideration will be paid for with:
- $500,000 in cash;
- $700,000 in unsecured convertible debt (five-year term, 10% interest per annum, convertible at a price of $0.16 per share);
- $4,800,000 in Solar Alliance common shares, at a price of $0.08 per share, for a total of 60,000,000 common shares; and
- One half share purchase warrant for each common share issued, at a price of $0.20 per share for a period of two years, for a total of 30,000,000 warrants.
“The transaction is expected to significantly increase the scale of Solar Alliance, be immediately accretive to Solar Alliance, provide access to the rapidly expanding Canadian solar market and create operational synergies while positioning the company to be cash flow positive post-transaction,” Solar Alliance CEO Myke Clarke said in a May 18 press release.
Solar Alliance’s increase in scale will allow for shared engineering, administrative and accounting services, increased buying leverage and decreased bonding and debt facility costs. The combined management, board and insiders will own approximately 54%, Clark said in the press release.
The transaction also comes at a favorable time for Canadian solar due to the introduction of a 30% investment tax credit in the federal budget for renewable energy projects in 2023.
Closing of the transaction remains subject to completion of due diligence, a binding definitive agreement, shareholder approval and approval by TSX Venture Exchange, which Solar Alliance has 90 days to complete.
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