ReNu Energy has agreed to a Heads of Terms with an international investment fund.
The Australian company has agreed Heads of Terms with Resonance Asset Management (Resonance) for the sale for cash of a 70 per cent majority equity stake in ReNu Energy’s existing bioenergy assets (the Proposed Transaction).
Resonance advises the specialised international infrastructure investment fund, Resonance Industrial Water Infrastructure Fund (RIWIF), which intends to make the investment.
Under the terms of the proposed transaction, Resonance will also have a First Right of Refusal to make further investments to support the development and growth of a combined bioenergy business portfolio with ReNu Energy of up to $100 million in Australia and New Zealand.
The completion of the proposed transaction, and further investments are subject to the satisfactory completion of due diligence and the subsequent approval by both ReNu Energy and RIWIF Boards.
RIWIF intends to invest up to $6 million to acquire a 70 per cent equity interest in ReNu Energy’s existing bioenergy assets and fund its 70 per cent share of the development of the AJ Bush bioenergy “G4” expansion project.
ReNu Energy’s two existing operational bioenergy projects are the Goulburn Bioenergy Project located at the Southern Meats abattoir and the AJ Bush Bioenergy Project located at the A.J. Bush and Sons (Manufacturers) rendering plant.
The proposed AJ Bush bioenergy “G4” expansion project was previously announced on 5 March 2018.
The investment in the proposed transaction by RIWIF will be staged as the conditions precedent for acquisition of each of the existing bioenergy assets are met.
ReNu Energy will retain a 30 per cent equity interest in the bioenergy asset portfolio and will operate the bioenergy business under a long-term operation and maintenance agreement, and will enter an engineering, procurement and construction contract for the AJ Bush bioenergy “G4” expansion project and subsequent projects.
Under the terms of the proposed transaction, ReNu Energy will continue business development activities to grow the portfolio of bioenergy assets, with RIWIF retaining the first right of refusal to fund 70 per cent of the capital investment in bioenergy projects initiated by ReNu Energy up to an aggregate portfolio value of $100 million.
Execution of binding agreements is subject to completion of due diligence by both parties, the approval of both ReNu Energy and RIWIF’s Boards, and necessary regulatory and third-party approvals.
ReNu Energy CEO, Craig Ricato, said, “This proposed investment by Resonance Industrial Water Infrastructure Fund in our existing bioenergy assets and their ongoing commitment to significantly grow the portfolio with us is an outstanding result for ReNu Energy.
“It validates the strong potential and value which we see in the Australian and New Zealand bioenergy market. The proposed transaction enables ReNu Energy to retain and capitalise on our expertise to further develop, construct, manage, operate and maintain bioenergy projects, whilst freeing up capital for investment in our growing portfolio of renewable energy projects. We believe that the net result will be a more resilient business.
“The installed capacity of bioenergy facilities in Australia and New Zealand trails that of Europe and the USA, and we believe that there is opportunity for over 100 new bioenergy projects in Australia alone using these established technologies. RIWIF’s financial backing will enable ReNu Energy to more vigorously pursue opportunities to provide clean, affordable energy to the agricultural and food-processing industries.”
CEO of Resonance Asset Management, Nick Wood, said, “RIWIF invest in long-term income generating industrial water assets, providing sustainable improvements to the environment. We are delighted to be partnering with ReNu Energy as they build out their Bioenergy portfolio across Australia and New Zealand and we look forward to a long-term relationship with them.”