Genex Power Limited (ASX: GNX) (Genex or the Company) is pleased to advise that it has signed a new Share Subscription Agreement (SSA or Agreement) with Electric Power Development Co Ltd trading as J-POWER.
On 3rd August signing of the SSA follows the signing of an original Share Subscription Agreement with J-POWER on 6 June 2019 (refer ASX Announcement dated 6 June 2019) (Original SSA), and the subsequent termination of this agreement and the signing of a new Memorandum of Understanding with J-POWER on 22 November 2019 (refer ASX Announcement dated 22nd November 2019). This was a result of the requirement to restructure the financing of the Kidston Pumped Storage Hydro Project (the Project), as announced on 1st November 2019.
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The Agreement signed is largely on the same terms as the Original SSA, and provides for a conditional investment of up to A$25M by way of a subscription for ordinary shares in Genex, with the proceeds to be principally applied towards Genex’s equity funding component for the construction of the Project. The balance of the equity requirement for the Project will be funded via a direct investment in the Project, which is the subject of a separate project equity investor process as announced on 1st July 2020.
Key terms of the SSA are as follows:
- Investment of up to a maximum of A$25 million;
- Subscription to occur at the higher of the 5-day Volume Weighted Average Price (VWAP) of Genex shares at financial close, or the date that is 5 days following financial close;
- This is subject to a subscription price cap which would result in a minimum investment of 15.00% of Genex’s enlarged share capital; and
- Subject to a maximum of 19.99% of Genex’s enlarged share capital;
- Provides for the appointment of a J-POWER nominee director to the Board of Genex;
- The Agreement is subject to several conditions precedent, including:
- Approval of Genex shareholders at an extraordinary general meeting (EGM);
- Execution of a Facility Agreement to be entered into between the K2-Hydro project entity and the Northern Australia Infrastructure Facility;
- Approval of the Australian Foreign Investment Review Board; and
- Financial close for the Project occurring prior to 31st December 2020.
As a further condition precedent under the SSA and in line with the Original SSA, Genex has also agreed to enter into a Technical Services Agreement (TSA) with J-POWER wherein J-POWER will provide certain professional technical advisory services to Genex in relation to the development and operational stages of the Project. The TSA is largely unchanged from the Technical Services Agreement entered into with J-POWER in June 2019.
As noted above, the Agreement is subject to the approval of Genex shareholders at an EGM. Full details of the SSA and TSA will be outlined in an Explanatory Memorandum to accompany a Notice of EGM to be sent to shareholders in the very near future.
Commenting on the Agreement with J-POWER, Genex CEO, James Harding stated:
“Genex is delighted with today’s signing of the new Share Subscription Agreement with J-POWER, who are global experts in hydroelectric projects, including pumped storage. Our relationship with J-POWER has remained strong since the signing of the original agreement in June 2019 and throughout the restructuring of the project financing for the Kidston Hydro Project, under the Memorandum of Understanding signed in November 2019. The signing of the agreement today cements this relationship with J-POWER as a long-term partner to finance and provide technical assistance for the construction of the Project, and to work with Genex to further develop our renewable energy and storage portfolio.”
“The investment by J-POWER secures the funding required for Genex’s equity component for the Project. The balance of the equity funding is to be secured via the project equity investor process, which is in the final stages as we continue to finalise the project financing arrangements with all our stakeholders. We will continue to keep the market informed of developments as we progress toward financial close which is targeted for September 2020.”
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