Offshore energy and marine consultancy AqualisBraemar will acquire marine and engineering consulting firm LOC Group (London Offshore Consultants).
Oslo-listed group AqualisBraemar, which offers consultancy services to the offshore energy industries, said Monday that the acquisition would create "a leading global independent offshore energy and marine consultancy."
David Wells, CEO of AqualisBraemar, said: "Our strategy is clear; we want to grow through continued expansion in the rapidly growing offshore renewables industry, and leverage on our position within shipping and oil and gas markets, to support this energy transition. LOC Group, with its strong and highly complementary footprint within the same industries, is a perfect fit for this strategy and will support our ambition of consistently returning capital to our shareholders."
London-based LOC employs 416 people and operates worldwide in over 30 offices located in Europe, Africa, the Americas, Middle East, Asia, and Australia.
LOC has generated revenues of USD 63 million in the past twelve months, with an adjusted EBITDA of USD 6.8 million. As of 30 September 2020, the group’s order backlog stood at USD 54 million.
Dr. R. V. Ahilan, CEO of LOC Group said: 2The consulting space within marine and offshore energy – including renewables and oil and gas – is ripe for consolidation. Our customers’ needs are rapidly evolving, with many branching out into new energy sources, and we believe our joint increased scale and wider global footprint will help us cater for those requirements."
Ahilan will continue in the joint company in a newly created role as chief energy transition officer, supporting the group’s ambition of 50 percent of revenues coming from renewables and other sustainability and CO2-reducing activities by 2025. He will also join the combined group’s executive management team.
Following the completion of the acquisition, the combined group will have a total of 880 employees in 85 offices in 39 countries all over the world. Today, AqualisBraemar has 465 employees, including subcontractors on a 100 percent utilization basis.
Growth of renewables
"By joining the fast-growing specialist renewable entities of AqualisBraemar’s offshore wind consultancy firm OWC and LOC Group’s Innosea and other renewable focused units, the combined group will double its size within renewables," AqualisBraemar said.
“The exponential growth we are witnessing within offshore renewables requires all the specialist competence it can get. However, this is not a numbers game, it is about working smarter. Combining OWC’s leading position within renewables consulting and engineering with Innosea’s specialist competence within fixed and floating substructure concept development and turbine engineering and analysis is one way to address this requirement. In addition, we have LOC’s leading position within marine warranty services for the offshore renewables sector,” says Dr. Ahilan.
“Our objective is that 50 percent of our revenues should come from the renewables sector and other sustainability and CO2-reducing activities in 2025. However, reducing the carbon intensity of the offshore oil and gas and shipping industries are also key to achieving the energy transition the world so desperately needs. We will continue to support all these industries to help make this energy transition happen,” adds Dr. Ahilan.
Terms of the transaction
AqualisBraemar has entered into an agreement to acquire 100 percent of the shares in Neptune Midco 1 Limited from the ultimate parent company of the LOC Group, LOC Group Holdings Limited, the shareholders of which include pan-European investment group Bridgepoint and key employees of LOC.
The purchase price consideration consists of a combination of cash consideration and conditional warrants in AqualisBraemar as follows:
*USD 20.2 million net cash consideration, subject to customary adjustments prior to closing
*1 million warrants, conditional on the AqualisBraemar share price 18 months after completion being above NOK 7.5
*1 million warrants, conditional on the AqualisBraemar share price 36 months after completion being above NOK 10.0
The warrants will be issued on completion of the transaction and will be exercisable in a short period following the expiry of the 18- and 36-month periods. The warrant condition thresholds are measured against the 60-day value-weighted average price prior to the expiry of these periods. The exercise price will be NOK 0.10 per warrant, being the nominal value per AqualisBraemar ordinary share.
AqualisBraemar will finance the acquisition through a combination of USD 5 million in existing cash, a new USD 15 million bank facility with Nordea, and a fully subscribed equity issue of USD 15 million. Part of the funds will be used to refinance LOC’s current debt at USD 12 million and cover other costs and contingencies of USD 3 million. LOC had a net cash position of USD 2 million as of 30 September 2020.
Closing of the acquisition is expected on or around 21 December 2020. The transaction is subject to approval of the equity issue by an extraordinary general meeting (EGM) in AqualisBraemar. The EGM will be held on or about 14 December 2020. Shareholders representing approximately 75% of the shares in AqualisBraemar have undertaken to vote in favor of the equity issue at the EGM.
AqualisBraemar and LOC Group will be trading separately for up to six months following completion of the transaction. A proposal to change the parent group name from AqualisBraemar ASA to AqualisBraemar LOC ASA will also be made to the extraordinary general meeting in AqualisBraemar.