The LOI between the parties includes binding exclusivity provisions and could be consummated as early as October 2017, subject to satisfaction of certain conditions including completion of due diligence acceptable to both parties, negotiation and execution of a definitive Merger Agreement, requisite board approvals for both parties as well as approval from the GSE shareholders. The transaction will be structured as a merger with a U.S. subsidiary of BlueNRGY (“Merger”). GSE shareholders will receive 34.0 million BlueNRGY ordinary shares plus warrants to purchase 8.5 million additional BlueNRGY ordinary shares.
William Morro, Chairman & Managing Director of BlueNRGY stated, “This Merger is very favorable for BlueNRGY as GSE's seasoned solar installations are delivering strong and predictable cash flows from long-term contracts with investment-grade utilities and municipalities. As a result, completion of the Merger will be immediately accretive to BlueNRGY. The Merger also greatly strengthens BlueNRGY's financial position, resulting in shareholders' equity of more than $25 million for the combined company. We believe this would constitute one of the strongest balance sheets of any independent provider of monitoring and control systems for the global renewable power industry and would cement the Company's position as a ‘Bankable' solutions and service partner.”
Mr. Morro continued, “The Merger will propel BlueNRGY toward its goal of industry leadership in other ways as well. The resulting expansion of our shareholder base and increase in capitalization should allow BlueNRGY to meet all of the quantitative requirements for regaining its NASDAQ listing. The strength of the combined company should also allow BlueNRGY to attract additional experienced Board members and broaden our network of significant stakeholders with an interest in fostering our global growth.”
Upon completion of the Merger, Wallace Giakas, GSE's Chief Executive Officer, will join the BlueNRGY Board of Directors. Mr. Giakas has been a director, executive officer and investment banker for both private and public companies for over 30 years in the United States, Europe and Asia.
Mr. Giakas commented, “GSE has a proud history of innovation in distributed energy generation and has always utilized the industry-leading technology of BlueNRGY's Draker subsidiary to optimize the financial performance of its solar facilities. Our diverse asset portfolio and relationships with leading utilities such as the Tennessee Valley Authority makes GSE's generation assets an ideal showcase for demonstrating how BlueNRGY's tools optimize grid integration and maximize solar project revenue. As the GSE sites are upgraded and enhanced to add storage and other functionality, we are confident that they will provide compelling validation of the advantages of deploying BlueNRGY's controllers, software and analytics. In addition, GSE has cultivated key utility relationships and valuable project development rights that I look forward to helping BlueNRGY benefit from in the coming months.”
The execution of the LOI with GSE follows the fiscal year-end recapitalization of BlueNRGY in which substantially all of the Company's subsidiary preferred equity securities and convertible debt instruments (aggregating US$13.3 million) were converted at a valuation of $0.50 per ordinary share. After giving effect to the recapitalization, BlueNRGY has approximately 34.5 million ordinary shares outstanding, calculated on a fully-diluted basis, prior to shares being issued to complete the Merger.
