Takeover offer lifts Alter NRG
An alternative energy company based in Calgary with a growing body of contracts in China has struck a surprise deal to be sold to one of its clients, a huge private Chinese energy technology firm, for about $147 million.
Alter NRG Corp. announced Friday it has agreed to support a $5 per share takeover offer by Harvest International New Energy, Inc., a Delaware corporation owned by “multibillion- dollar company” Sunshine Kaidi New Energy Group Co. of China.
It said the price represents a 160-per-cent premium over its 20-day volume-weighted average price on the Toronto Stock Exchange.
In early trading Friday, Alter NRG stock climbed more than 150 per cent to $4.86, nearly matching the offer price, from Thursday’s closing price of $1.93. It closed at $4.59. In the past 52 weeks, it has traded between $1.56 and $4.36.
“Given the substantial premium to market, the offer is obviously very attractive from a financial perspective to shareholders of Alter NRG,” chief executive Walter Howard said in a news release.
“However, it is also strong validation of the company’s business and technology. With significant financial and technical capabilities, Harvest is well positioned to support the accelerated global deployment of Alter NRG’s technology, products and services.”
The takeover is part of a technology consolidation plan. Earlier this month, Sunshine Kaidi New Energy announced it would buy alternative energy technologies and a decommissioned demonstration project from U.S.-based Rentech, Inc. for $15.3 million, with an additional payment of up to $16.2 million following successful construction of a demonstration plant in China.
Alter NRG said Friday the takeover has unanimous support of its board of directors, adding that directors, executive officers and investor Ervington Investments have agreed to sell the 17.9 per cent of the shares that they control.
It said the takeover must receive approval by the Committee on Foreign Investment in the United States to be finalized. The takeover offer is expected to be mailed out in coming weeks to shareholders and approval also requires support by holders of two-thirds of the shares.
A year ago, the company raised $5 million by selling new shares for $2.56 each. In its recent annual results news release, Alter NRG said it posted record sales in 2014 of $24 million, an increase of 68 per cent over 2013, reflecting its “ma- turing business plan.”
It reported gross profit of $6.7 million and a loss from operations of $8.6 million.
In the release, it said Sunshine Kaidi New Energy completed a demonstration project in 2014 in China featuring Alter NRG’s Westinghouse Plasma Solution technology. It said the facility processes 100 tonnes per day of biomass waste and converts it into liquid fuels.
In a report last week, analyst MacMurray Whale of Cormark Securities said Alter NRG’s business is benefiting from high and rising disposal costs for waste along with high power prices which are shifting interest from incineration to gasification as a key alternative to landfill.
“Alter NRG owns the Westinghouse Plasma Corp.’s gasification technology that has been in development for more than two decades and is operational at several sites,” he wrote. “As the Tees Valley 1 project ramps to full operation in 2015, we expect a strong increase in orders.”
The Tees Valley project in Teesside, England, is a $1-billion US two- phase waste gasification project with each phase capable of turning 950 tonnes of municipal solid waste daily into 50 megawatts of electricity. It’s being built by Air Products, Inc., using Alter NRG technology.