Australian Future Energy to complete merger with Synthesis Energy Systems
Australian Future Energy, an Australian incorporated privately-owned energy company, has agreed on the details of a merger with Synthesis Energy Systems, a co-founder and 35% shareholder in AFE. As a result of the transaction, AFE will become a wholly-owned subsidiary of SES, with AFE having the majority of Board and Management positions in the new company.
· Synthesis Energy Systems (SES) will acquire 100% of Australian Future Energy (AFE) with pre-commitments from all major AFE shareholders;
· The new entity will be listed on NASDAQ: SES;
· As part of the transaction, SES offers to acquire 100% of Batchfire Resources, owner of the Callide Thermal Coal Mine, with minimum acceptance level set at 25%, and pre-commitments from 33% of Batchfire shareholders;
· This will create a newly invigorated clean energy company with a multi-tier platform and a combination of operating and growth assets;
· A strong Board and Management team, with AFE majority positions; and
· Transaction capital secured and completion is expected in Q1, 2020.
In connection with entry into the Merger Agreement, the Company also announces that SES has offered to acquire 100% of the issued capital of Batchfire Resources Pty Ltd (Batchfire), owner of the Callide Thermal Coal Mine in Queensland, via the issuance and exchange of one share of SES common stock for each ten ordinary shares of Batchfire.
On acceptance, the acquisition offer for Batchfire represents another milestone achievement towards the creation of a vertically integrated energy company. The offer also combines Batchfire’s long-term operating cash flow assets with the high-quality growth assets held by AFE.
On closing of the transaction, Mr. Kerry Parker, current CEO of AFE, will be appointed as President and Chief Executive Officer of SES, and Mr. Ron Higson, current COO of AFE, will be appointed as Chief Operating Officer of SES. The appointment of a new Chief Financial Officer (CFO) will be made at or prior to closing.
Additionally, current AFE directors Mr. Edek Choros, Mr. Stephen Lonie, and Mr. Richard Barker will be appointed to the SES Board of Directors. Mr. Robert W. Rigdon, a long-time SES executive who has served as Deputy Chairman and Director of AFE since its inception and is the current Vice Chairman, President and CEO of SES, will remain on the board of SES.
Once convened, the Board of Directors is expected to appoint one or more additional, independent directors. All other current directors of SES will resign their positions at merger closing.
Australian Future Energy CEO, Mr. Kerry Parker, said that the merger offers an unprecedented opportunity for shareholders to be a part of a company with a strong growth pipeline, while ensuring that existing assets will maintain a strong balance sheet.
“We are delighted to be entering into this merger and believe it provides strong value for the shareholders of AFE, SES, and Batchfire. From the outset, our strategy at AFE has been to create a vertically integrated energy development and production company that combines quality, operating cash flow assets with a set of well advanced and well planned growth assets,” Mr Parker said.
“We have accomplished this with our position in, and the contribution of AFE’s founding shareholders towards the successful turnaround of Batchfire’s Callide Mine, along with a project pipeline that includes substantial work completed on our advanced Gladstone Energy and Ammonia Project, the acquisition of the Pentland Coal Mine Project (270 million metric tonnes resource), and the work we have completed for later-stage gasification projects in Townsville.”
Mr. Parker also commented that the Australian east-coast gas market is in short supply for the foreseeable future.
“Three large LNG projects built in the past ten years in Gladstone, providing approximately 1,200 PJ per annum, are now exporting gas offshore to Asia, at the same time that New South Wales and Victoria have imposed bans on new gas developments,” he said.
Mr Parker also said that it was the right time and the right place for scalable and replicable clean energy gasification projects with compelling economics.
“Production costs of conventional gas are on the rise, and we’re able to secure long-term production of gas at competitive pricing.
“At Gladstone, we’ve made significant progress, putting all of the building blocks in place in logical order for a successful project, with a disciplined approach to development, and cautious use of funding,” Mr Parker said.