A signed agreement will result in a Chinese envirotech company acquiring majority interest in AnaeCo Limited, subject to shareholder approval.
The deal provides Xiaoqing Environmental Protection Technology Co Ltd. (XEPT) with 55% controlling interest in AnaeCo, with XEPT purchasing part of AnaeCo’s $16.54 million loan owed to Monadelphous Group Limited (MND) at converting it to equity.
MND will also convert the remaining loan to equity, giving it a 30% share in AnaeCo. The agreement stipulates that total value of loan converted to equity will not exceed $17.23 million, with pricing at $0.00138 per share.
AnaeCo will be free of its loan obligations upon completion of the deal, and will have $3.7 million in free cash. The transaction is seen to value AnaeCo at $20.91 million.
The AnaeCo board supports the transaction and is expected to recommend approval among shareholders, who will be meeting by end of September 2016 to discuss the matter.
XEPT Chairman Han Xiaoqing looks forward to mutual expansion of operations once the deal is complete.
“We intend to combine both the technical and commercial skills of XEPT who currently only operate in mainland China with those of AnaeCo to expand both businesses in Australia, China and South East Asia.”
AnaeCo Managing Director David Lymburn also welcomed the move, saying that XEPT can bolster AnaeCo’s operations.
“We welcome this transaction which brings XEPT not only as a cornerstone shareholder, but also a substantial and successful organization which is well established in the water, solid waste and renewable energy sectors in mainland China.”
“The AnaeCo team is enthusiastic about collaborating with XEPT on projects in Australia, China and elsewhere in the region,” he added.