OSLO, NORWAY: The board of administrators of Otovo AS has introduced a merger plan with European Distributed Energy Assets Holding AS (EDEA).
On 10 November 2021 Otovo offered an all-share offer for EDEA, and after the completion of the transaction Otovo had elevated its possession from 18.63% to 88.43%. Now so as to optimise the possession construction of EDEA, and to reduce extra reporting and operational bills in EDEA the board of administrators of Otovo and EDEA have collectively ready a merger plan for the merger between the companies, the place Otovo would be the buying entity and EDEA would be the transferring entity.
The merger will be accomplished by the dissolvement of European Distributed Energy Assets Holding AS (EDEA) and by the switch of all of EDEA’s assets, rights and liabilities to Otovo.
As consideration, the shareholders of EDEA, with the exception of Otovo, will obtain 1.7 new shares in Otovo for every share owned in European Distributed Energy Assets Holding AS (EDEA). The share-for-share exchange ratio is based on fair values in accordance with recognised valuation principles.
In the merger, Otovo is valued at a complete fairness worth of NOK 3,484,390,351 based on volume-weighted trades on Euronext Growth Oslo inside the interval from 25 March 2022 to 29 March 2022 and EDEA is valued at a complete fairness worth of NOK 285,132,515. Otovo currently owns 88.43% of the shares in EDEA and no merger consideration will be issued for such shareholding.
The merger will result in a share capital increase in Otovo of NOK 12.660 million, by the issuance of 1.266 million new shares. The new shares will be admitted to buying and selling on Euronext Growth Oslo instantly after the merger has been completed, along with Otovo’s different shares.
The reason for the Merger is to optimise the enterprise of EDEA. Since Otovo established EDEA, leasing has confirmed to be attractive to customers in Europe, and entry to capital and the curiosity in investing on this space has elevated significantly. While the unlevered internal rate of return for EDEA’s present portfolio is round 10%, higher return on the fairness can be obtained by financing parts of the balance sheet by debt.
Volume is key to extend the debt to fairness ratio and unlock additional worth in EDEA. Therefore, it’s preferable to extend marketing spending and different buyer acquisition efforts however that is difficult in today’s setup the place Otovo decides the marketing spend, however is not uncovered to the full worth creation in EDEA.
The market practice inside the residential photo voltaic sector is more and more to have the financing entity of leasing assets as a fully-owned subsidiary inside the identical group because the origination firm that sells the leasing contracts. In such a setup, the pursuits between the originator and the financier are aligned, and the origination firm is incentivised to extend the leasing share of gross sales thereby increasing the total worth created.
The merger is additional anticipated to reduce extra reporting and operational bills in EDEA, and the merged firm is anticipated to be higher positioned for accelerated growth and have greater flexibility in phrases of capitalization and future technique for financing leasing of photo voltaic constructions.
The merger plan will be submitted to the annual general conferences of Otovo and EDEA for approval, each scheduled for 26 April 2022. Subject to approval by the general meetings, the merger is anticipated to be accomplished in mid-June 2022 following expiry of the creditor discover period.
For homeowners, Otovo is the best way to get photo voltaic panels on the roof, and batteries inside the home. Otovo is a market that organises hundreds of local, excessive high quality and certified energy installers. The firm makes use of its proprietary technology to analyse the potential of any home and finds the best price and installer for customers based on an automatic bidding course of between available installers.