LONDON (Alliance News) - Pressure Technologies PLC on Monday said it agreed to sell its subsidiary, PT Biogas Holdings Ltd, to Canada-listed Creation Capital Corp for GBP11.1 million.
Pressure Tech shares were up 14% on Monday at 100.00 pence each.
The engineering company said Creation Capital floated on Canadian Stock exchange at the end of October and intends to raise CAD12.0 million, about GBP7.1 million, to fund the acquisition and its ongoing working capital requirements.
Under the terms of acquisition, Pressure Tech will secure GBP5.0 million in cash upon completion of the disposal. A further GBP2.0 million will be paid in Creation Capital shares.
The remaining GBP4.1 million will be received by way of a promissory note to be issued to Pressure Tech by Creation Capital.
The promissory note will be denominated 50% in pounds sterling and 50% in Canadian dollars. It will mature 24 months from completion of the acquisition and will bear interest at the rate of 7% per year.
Pressure Tech said it will use the cash to pay down its debt. As at the end of March, the company's net debt was GBP9.3 million.
The sale of PT Biogas will enable Pressure Tech to focus investment on its core specialist engineering businesses, it said. PT Biogas was a part of its AE division, which generated revenue of GBP2.8 million in the six months to the end of March.
"The global outlook for renewable natural gas has improved again throughout the year with governments and energy majors increasing their commitment to renewables in the global energy mix, with renewable natural gas playing a significant role, particularly in the US and Europe," said Pressure Tech Chief Executive Chris Walters.
The company said it will announce its full-year results on December 11.
Pressure Tech (PRES)