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Drax Group to purchase $652 million of Pinnacle Renewable Energy

For a cash amount of $652m (C$831m), Drax Group as well as one of its affiliates have agreed to purchase Pinnacle Renewable Energy. Together with the Drax Canadian Holdings, the group firm has signed a definitive deal to buy all common shares released and outstanding.  The contract involves the inclusion of net debt in its strategic partnerships as well as the non-controlling assets of Pinnacle.

Duncan Davies, Chief executive officer of Pinnacle Renewable Energy, stated:’ The board of directors of Pinnacle has overwhelmingly agreed that the deal is the right course of direction for the group as well as its shareholders.” “The deal will provide immediate, substantial, as well as certain cash benefit to our shareholders upon closing.” “At the same period, the Pinnacle, as well as Drax combination, will establish pioneer in green biomass with the ambition, technical expertise as well as financial capacity to further meet the growing market for renewable energy products worldwide.”

In favor of the offer, Pinnacle shareholders have joined the voting support deals.  This includes the Canadian investment group ONCAP, which holds 36 percent of the total of the outstanding shares of Pinnacle. Pinnacle shareholders are set to receive $8.88 (C$11.30) for every share in cash, as per the agreement. In addition to shareholder approvals, legislative and regulatory authorizations and the consent of the Supreme Court of British Columbia are key to the completion of the transaction. Pinnacle stated the transaction would be implemented in compliance with the Business Corporations Act framework of arrangement (British Columbia).

Drax Plc is a British firm generating electrical power. The Company consists of downstream and upstream companies. Drax Power Limited, which operates a biomass-fuelled power plant, Drax power station, close to Selby in the North Yorkshire, is the largest downstream company centered in the UK.  The business is part of the FTSE 250 Index and is traded on the London Stock Exchange.

Drax has agreed to postpone its commercial shutdown of coal generation to 2021 March following a review of operations and consultations with National Grid, Ofgem as well as the UK Government. To satisfy Capacity Market requirements until September 2022, the two coal systems at the station will continue to be available. Drax will now begin a consultation phase with workers and trade unions but predicts that it will entail a one-off closure expenditure of £ 25-35m in the area. The energy provider also expects job losses to be between 200 and 230 from 2021 April onwards.

Chief Executive Will Gardiner of the Drax Group stated: “Decision to end the usage of coal at Drax is a milestone in our ongoing efforts to develop the firm and become a major carbon negative company worldwide by the year 2030. A few years ago, Drax’s shift away from coal started and I’m pleased to say that we will complete the job well in advance of the government’s 2025 deadline.”

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