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Pinnacle Renewable Energy to be acquired by Drax Group
CANADA (News release) -- Pinnacle Renewable Energy Inc. has entered into an arrangement agreement with Drax Group plc and its wholly-owned subsidiary, Drax Canadian Holdings Inc., pursuant to which Drax will acquire all of the issued and outstanding common shares of Pinnacle in an all-cash transaction valued at C$831 million, including the assumption of net debt and Pinnacle's non-controlling interests in its joint ventures.

Duncan Davies, Pinnacle's CEO, said: "Pinnacle's Board of Directors has unanimously determined that the Transaction represents the best course of action for the Company and its shareholders. On closing, the Transaction will deliver immediate, significant and certain cash value to our shareholders. At the same time, the combination of Pinnacle and Drax will create a global leader in sustainable biomass with the vision, technical expertise and financial strength to help meet the growing demand for renewable energy products around the world."

The payment by Drax of the consideration to Pinnacle shareholders pursuant to the transaction is also subject to the approval by a majority of the votes cast by holders of Drax shares at a general meeting of Drax shareholders.

Under the arrangement agreement, Pinnacle has agreed to suspend the declaration of its dividends on Pinnacle Shares for the 1Q 2021.

The arrangement agreement provides for customary non-solicitation provisions on the part of both Pinnacle and Drax, subject to "fiduciary out" rights. Pinnacle has agreed to pay Drax a termination fee of C$12.5 million and Drax has agreed to pay Pinnacle a reverse termination fee of C$25 million if the arrangement agreement is terminated in certain circumstances. Drax has also agreed to make an expense reimbursement payment to Pinnacle of C$5 million if the arrangement agreement is terminated as a result of the Drax shareholders not approving the transaction at the Drax Meeting.

In addition to Pinnacle and Drax shareholder approvals, the Transaction is subject to other closing conditions including governmental and regulatory approvals as well as the approval of the Supreme Court of British Columbia. The transaction is not subject to a financing condition and is expected to close in the 2Q or 3Q 2021.

Pinnacle is the second largest producer of industrial wood pellets in the world. The company operates nine production facilities in Western Canada and one in Alabama, with one additional facility under construction in Alabama and more in development.

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