Fusion Fuel signs non-binding heads of term for energy distribution acquisition

Fusion Fuel (HTOO) Green has executed non-binding Heads of Terms with a privately-held United Kingdom-based fuel distribution business to acquire 100% of the equity of Target and certain related companies from their existing shareholders. The signing of the Heads of Terms follows the signing of a non-binding Letter of Intent between the parties, which was previously announced by the Company on April 9. For the fiscal year ending April 30, 2024, Target generated revenues of approximately $50M and net income of approximately $5M. Target showed strong growth in the following fiscal year ending April 30, achieving revenues of approximately $58M and net income of approximately $7M. As of April 30, Target had no debt except for approximately $1M under a revolving credit line. Under the Heads of Terms, subject to execution of one or more definitive agreements with the existing shareholders of Target, Fusion Fuel will acquire the entire share capital of Target for total consideration of GBP 50M, consisting of GBP 40M in debt-financed cash and GBP 10M in Fusion Fuel ordinary shares in accordance with certain shareholder approval and securities registration requirements. The Heads of Terms include equity value protection provisions with respect to the equity portion of the purchase price, consisting of certain downside price protection terms for the sellers, a buy-back option, and an upside cap provision. It is anticipated that the definitive agreements will contain customary representations, warranties and covenants made by Fusion Fuel, Target, and Target’s shareholders, including covenants relating to the parties using their commercially reasonably efforts to cause the transactions contemplated by the agreement to be satisfied, covenants regarding obtaining the requisite approvals of directors and shareholders, indemnification of directors and officers, and Fusion Fuel and Target’s conduct of their respective businesses between the date of signing of definitive agreements and the closing, and other customary conditions to closing. It is anticipated that definitive agreements will also contain certain termination rights for both Fusion Fuel and Target, and, in connection with the termination of any such definitive agreements under certain circumstances, Fusion Fuel and Target may be required to pay the other party a termination fee. Entry into definitive agreements will also be subject to: legal, tax and accounting structuring advice, the satisfactory completion of due diligence investigation by the parties on all aspects of business, operations, financial condition and other assets and liabilities appropriate for a transaction of this nature, and the satisfaction of the conditions described in the Heads of Terms. Although generally non-binding, the Heads of Terms contain certain binding exclusivity and confidentiality terms and other binding terms and provisions. The Heads of Terms provides that Target will not solicit or negotiate with other parties for 90 days from signing of the Heads of Terms.