Mast Energy. Regulatory News (MAST)

Mast Energy Developments PLC

(Incorporated in England and Wales)

(Registration Number: 12886458)

Share code on the LSE: MAST

ISIN: GB00BMBSCV12

("MED" or "the Company")

12 August 2021

Mast Energy Developments Plc ("MED" or "the Company") 

MED acquires 9 MW Pyebridge Synchronous Gas-powered Standby Generation Facility

Mast Energy Developments Plc, the UK-based multi-asset operator in the rapidly growing Reserve Power market, is pleased to announce that it has exchanged and completed a final Sale and Purchase Agreement ("SPA") to acquire Pyebridge Power Limited ("Pyebridge"), a Special Purpose Vehicle ("SPV") comprising an installed and commissioned synchronous gas-powered standby generation facility with 9 MW export capacity based in Somerset Derbyshire (the "Acquisition"). 

The Acquisition consideration is £2,500,000 in cash - an initial £1,500,000 to be paid in cash at completion and deferred consideration of £1,000,000 to be paid in two equal tranches 8 months and 12 months respectively from the date of completion.

Key Features of Acquisition

· Production-ready project:

§ Freehold site with established infrastructure including 9 MW grid export connection and several world-renowned OEM operating units in situ and live.

§ Permitting in place, Embedded Generation Regulation ("G59") commissioned and live.

§ Gas kiosk commissioned and live.

· Operational status and compelling economics:

§ During the SPA negotiations the previously reported financial model based on 7.5 MW generating capacity has been optimised and increased to 9 MW generating capacity.

§ Based on the optimised financial model an EBIDTA of c. £488,221 per annum is projected compared with the £406,000 per annum previously modelled.

§ The optimisation exercise is expected to increase the post-tax summation of annual revenue stream over project life by up to 20% to c. £ 8.77m and increasing the Internal Rate of Return ("IRR") from 19% to up to 21%.

§ Immediate revenue creation that promotes strong value creation

· Offtake/PPA contracts:

§ Power Purchase agreement and Communications contract with EDF with a floor price that guarantees net income.

§ Capacity Market contract worth £60,000/annum (starting October 2021) for 15 years giving a value of £900,000 before Retail Price Index ("RPI") upward adjustment.

· Rapidly growing target market:

§ Increasing volatility arising from structural shift from fossil fuels to renewable sources and rising spend on gas & electricity is resulting in tight capacity margins during peak times.

· Completion

§ The Acquisition completed on transfer of the Pyebridge Synchronous Gas-powered Standby Generation Facility ("Pyebridge Facility") inclusive of the land on which the Pyebridge Facility has been established, to the Company.

NOTE: All the financial numbers stated above remain subject to change until such time as actual production figures are available, following a suitable period of steady state operation.

Louis Coetzee, MED Non-Executive Chairman, said: "The completion of the Pyebridge SPA is a first demonstration of the commercial and technical benefits derived from an installed and commissioned power generating facility and is our first fully operational site in MED's growing portfolio of flexible power plants in the UK. The acquisition of the Pyebridge site is a landmark next step towards the much larger portfolio of 300 MW that MED is aiming to establish in the UK, with a pipeline of sites totalling a further 71 MW currently being assessed, and additional prospective sites being continuously added in line with our expectations set out in the Prospectus issued in April 2021."

MED CEO, Paul Venter, commented: "We are very pleased to state that MED, at completion of the Acquisition, now constitutes a fully-fledged operational entity with instantaneous revenue creation and sufficiently funded to establish our first phase project roll out strategy, as previously communicated to the market."

Transaction Rationale

The Acquisition is an important step to deliver MED's strategic objective to establish itself as a significant presence in the Reserve Power market, with the ultimate objective of developing a reserve power portfolio in aggregate of 300 Mw generating capacity.

Through the Acquisition, MED will:

· Create a strategic platform from which it can significantly accelerate the development of its project portfolio by developing multiple sites simultaneously.

· Significantly improve and enhance the commercial integrity and investment attractiveness of MED's reserve power portfolio by establishing early - almost immediate - revenue opportunity.

· Create an opportunity to accelerate the Bordesley reserve power project towards earlier production than currently scheduled.

· Mitigate investment risk materially through the acquisition of a freehold site with established infrastructure, operating engines in situ, connected to Balance of Plant as well as gas and grid connections.

· Realise significant cost, time and CAPEX savings in respect of the overall development plan for the MED Reserve Power portfolio as a direct result of:

o The competitive price that was negotiated for the Acquisition.

o Compelling economic, commercial, and technical merits of the Acquisition; and

o Unique strategic fit with the MED development strategy.

· Deliver the first operational site in line with the estimated timelines as per the Prospectus dated 14 April 2021.

· Provide short term (immediate) revenue opportunity, building upon the revenue potential of Bordesley (5 MW) and the previously announced 6 MW West Midlands project (see RNS of 07 September 2020), and within the Listing working capital budget forecast.

Further information on the Company, including the prospectus published in conjunction with Admission, can be found on the Company's website: www.med.energy

This announcement contains inside information for the purposes of the UK version of the Market Abuse Regulation (EU No. 596/2014) as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR"). Upon the publication of this announcement, this inside information is now considered to be in the public domain.

ENDS

For further information please visit www.med.energy or contact: