RedT has confirmed it has agreed outline terms for a reverse takeover of fellow vanadium redox flow battery firm Avalon, a move which the firm said would create a “leading player” in the energy storage market.
RedT, whose future has been uncertain owing to financial difficulties, confirmed this morning that outline terms for the proposed merger had been agreed, and the duo have plans for the injection of “significant new funding” to propel the combined business forward.
The merger itself will take the form of a reverse takeover in which a share-for-share acquisition of Avalon has been sealed, using redT shares valued at 1.65p per share.
That deal values Delaware, US-based Avalon at around US$37.5 million.
The combined company will seek re-admission to trade on the AIM market of the London Stock Exchange, and it intends to raise at least £24 million of new funds in order to power the company forward.
RedT, Avalon and the former’s financial adviser VSA Capital have received preliminary support for that fundraising from what’s been described as a “strong new strategic investor” that intends to make a cornerstone investment, on top of interest from existing institutional investors in redT, and existing and new investors in Avalon.
That interest has allowed redT’s board to today state with confidence that the merged business will start in a “robust” financial position, able to pursue an “exciting development and growth strategy”.
RedT said the combined entity would have operations in North America, Europe and Asia alongside a global sales footprint, and be in a position to capitalise on “significant opportunities” in the energy storage market.
Trading in redT shares has this morning been suspended pending advanced discussions and an agreement between the two firms. The duo have attached no specific timeframe to those discussions concluding but stressed a desire to publish admission documents as soon as possible.
Neil O’Brien, executive chairman at redT, said getting to this stage in its search for strategic partners was a “major step forward” for the business.
“The combination of our two companies will create a major force in the rapidly growing energy storage sector. We will have global reach, world-leading technology and an enhanced ability to drive down production costs and attract new capital,” he said.
RedT’s future had appeared uncertain for a number of months despite the formation of a major C&I solar-plus-storage offering with European utility Statkraft. It secured a further £3.2 million of funding in April this year, but last month reported a widening loss and admitted that failure to land additional investment could result in the firm ceasing to trade by the end of November.