redT energy plans merger with Avalon Battery Corporation

UK energy storage firm redT energy plans to merge with US company Avalon Battery Corporation. 

The two companies have entered a non-binding Memorandum of Understanding (MoU) that sets out the basis upon which the two businesses, subject to a number of conditions, intended to form the leading global company in vanadium redox flow batteries. The Merger will take the form of a share-for-share acquisition of Avalon with redT shares valued at 1.65p per share, which values Avalon at US$37.5m.  The Company will seek re-admission to trading on the AIM market of the London Stock Exchange for its Ordinary Shares including those to be issued to Avalon shareholders.

To drive the growth and development of the Enlarged Group, provide working capital, and take advantage of the substantial opportunity presented by the Merger, the merged business intends to raise at least GBP24m (US$30m) of new funds (the "Fundraising") as part of the Merger.  VSA Capital, redT's financial adviser, and broker, redT, and Avalon have received substantial preliminary support for the Fundraising from a strong new strategic investor that intends to make a cornerstone investment in the merged business, as well as from existing institutional investors in redT and both existing and certain proposed new investors in Avalon. The Fundraising is expected to be at a price not exceeding 1.65p per share subject to finalizing terms and may include some interim financing while the RTO process is underway.  It is expected that the Merger and the Fundraising will be inter-conditional and complete at the same time.

The Merger remains subject to inter alia further due diligence by each party, definitive legal agreements being reached, and a total of at least GBP24m (US$30m) of new funds being raised to fund the enlarged business.  The Fundraising and the Merger will be subject to the approval of redT's shareholders and the Merger itself is also subject to the approval of the shareholders of Avalon.