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Pressure Technologies PLC   -  PRES   

Proposed sale of Greenlane Biogas

Released 07:00 10-Dec-2018

RNS Number : 8952J
Pressure Technologies PLC
10 December 2018







10 December 2018


Pressure Technologies plc

("Pressure Technologies" or the "Group")

Proposed sale of Greenlane Biogas

Pressure Technologies plc (AIM: PRES), the specialist engineering group is pleased to announce that it has today entered into a binding letter of intent ("LOI") with Creation Capital Corp (TSX-V: CRN.P) ("Creation Capital") a capital pool company listed on the TSX Venture Exchange ("TSX-V") to sell its wholly-owned subsidiary, PT Biogas Holdings Limited ("Greenlane"), which is the holding company for the Group's Alternative Energy Division which trades under the name Greenlane Biogas ("the AE Division") for a total consideration of £11.1 million (the "Sale").

Commenting on the Sale, Chris Walters, Chief Executive of Pressure Technologies, said:

"The global outlook for renewable natural gas (RNG) has improved again throughout the year with governments and energy majors increasing their commitment to renewables in the global energy mix, with RNG playing a significant role, particularly in the US and Europe. 

"In June 2018, due to its significant potential, we announced that strategic options would be evaluated for our AE Division that would increase market opportunities and help unlock shareholder value. Our strategic option review also considered refocusing the Group on core specialist manufacturing activities in the defence and oil and gas markets.

"As a result of this strategic review and following the appraisal of outright sale and merger options, we have commenced a process to spin out Greenlane and list it on the TSX Venture Exchange, which will be accomplished by selling it to Creation Capital. We will remain a supportive minority shareholder and anticipate retaining our holding for the medium term."

Information on Creation Capital

Creation Capital joined TSX-V on 29 October 2018 with the aim of acquiring a business in the energy sector.  The chairman of Creation Capital is Wade Nesmith, a lawyer who as a senior partner, specialised in securities law with Lang Michener LLP (now McMillan LLP) (1993 - 1998).  He was the founder of Primero Mining Corp ("Primero). He served in the capacity of director of the Company from October, 2008 to May, 2018 when Primero was acquired by First Majestic Silver Corp.  He was a founding director of Westport Fuel Systems Inc. and from 1998 to 2003 he worked for Westport, helping to lead their public markets activities and retiring as President, Westport Europe. He was also a founding director of Wheaton Precious Metals Corp. (formerly Silver Wheaton Corp.) (TSX, NYSE), serving from 2004 to 2016. Mr. Nesmith is also currently a director Westport Fuel Systems Inc. and was appointed to its board in June, 2017.

Creation Capital intends to raise C$12.0 million by way of a private placement ("Private Placement") in order to, inter alia, fund the purchase of Greenlane and to fund its ongoing working capital requirements. 

Trading in the common shares of Creation Capital will be suspended on TSX-V with effect from today, 10 December 2018 and are expected to remain halted until the completion of the acquisition of Greenlane and the Private Placement, which is expected in late January 2019 ("Completion").

Summary of the Sale

The consideration for the Sale is as follows:

·   £5.0 million payable in cash on Completion;

·   £2.0 million payable in common shares of Creation Capital on Completion, to be issued at a price per share equal to the Private Placement price; and

·   £4.1 million by way of a promissory note (the "Promissory Note") to be issued by Creation Capital to Pressure Technologies on Completion.  The Promissory Note will (i) be denominated 50 per cent. in pounds sterling and 50 percent in Canadian dollars; (ii) mature 24 months from Completion; and (iii) bear interest at the rate of 7% per annum.

A Pressure Technologies nominee will be appointed as an observer of all Creation Capital board meetings and activities until such time as the Promissory Note, together with all accrued and unpaid interest, is paid in full and retired.

Benefits of the Sale

The cash to be received by the Group on Completion will be used to pay down the Group's debt and the strengthened balance sheet will enable the Group to focus investment on its core specialist engineering businesses.  As at 31 March 2018, the Group's net debt was £9.3 million.

Background to the Sale

As set out in the Group's Interim Report, announced on 12 June 2018, the Board stated that it was considering a number of strategic options to realise the potential in the AE Division and unlock better value for shareholders.

Greenlane is a world leader in technology used to upgrade biogas generated from landfills, waste water treatment plants, and agricultural and food waste into a clean and marketable renewable natural gas product. Greenlane has been in operation for over 30 years and has supplied over 100 biogas upgrading units in 18 countries worldwide, including the first upgrading systems in 11 countries and the world's first and second largest biogas upgrading facilities in Germany and Canada. Greenlane designs and supplies the equipment used to upgrade biogas produced by the anaerobic digestion of organic waste to a high-quality methane product suitable for either injection into the natural gas grid or direct use as vehicle fuel. Greenlane, headquartered in Vancouver, British Columbia, is the operating entity of the AE Division of Pressure Technologies.

For the full year ended 30 September 2017, the AE Division had revenue of £15.8 million and was breakeven at the operating profit level. In the six months to 31 March 2018, it had revenue of £2.8 million and an operating loss of £0.8 million. Net assets at 30 September 2017 were £14.7 million.

Further Details of the Sale

The Sale constitutes a substantial transaction for Pressure Technologies for the purposes of Rule 12 of the AIM Rules.

The Promissory Note will be secured by all of the assets of Greenlane including a pledge of the shares of Greenlane.  The payment of the principal together with any and all accrued but unpaid interest on the Promissory Note will be made by way of balloon payment on maturity unless repaid earlier by Creation Capital.

The completion of the Sale remains subject to a number of terms and conditions, including, among other things:

·     Completion of the Private Placement;

·     Creation Capital obtaining all necessary consents, orders and regulatory approvals, including the conditional approval of the TSX Venture Exchange;

·     no material adverse changes occurring in of either Creation Capital or Greenlane;

·     completion of customary due diligence; and

·     other standard conditions of closing for a transaction in the nature of the Sale.

As part of the review of strategic options, the Group engaged Creation Partners LLP ("Creation Partners") to provide strategic advice relating to a potential divestiture of the AE Division.  Creation Partners is a limited liability partnership that is controlled by Wade Nesmith, David Demers and David Blaiklock, each of whom is a director of Creation Capital.  An advisory fee of no more than 4% of the consideration will be paid to Creation Partners from the Group's share consideration, 50% of which will be received by Creation Partners upon Completion and 50% of which will be deposited in escrow and received by Creation Partners upon repayment of the Promissory Note.

Full year results

The Group will announce its full year results for the year ended 29 September 2018 on Tuesday 11 December 2018.


For further information, please contact:


Pressure Technologies plc

Chris Walters, Chief Executive

Joanna Allen, Chief Financial Officer

Keeley Clarke, Investor Relations


Tel: 0114 257 3622

Cantor Fitzgerald Europe (Nominated Adviser and Broker)

Philip Davies / Will Goode

Tel: 020 7894 7000


Simon Hudson

Tel: 020 7920 3150




Company description - 

With its head office in Sheffield, Pressure Technologies was founded on its leading market position as a designer and manufacturer of high-pressure components and systems serving the global energy, defence and industrial gases markets. Today it continues to serve those markets from a broader engineering base with specialist precision engineering businesses and has a worldwide presence in Alternative Energy as a global leader in biogas upgrading.

Pressure Technologies has three divisions, Precision Machined Components, Cylinders and Alternative Energy, serving four main markets: oil and gas, defence, industrial gases and alternative energy.

Precision Machined Components -

●     Al-Met, Mid Glamorgan, acquired in 2010 

●     Roota Engineering, Rotherham, acquired in March 2014 

●     Quadscot, Glasgow, acquired in October 2014 

●     Martract Limited, Barton-on-Humber, acquired in December 2016 



●     Chesterfield Special Cylinders, Sheffield, IPO cornerstone in 2007 and includes,  CSC Deutschland Gmbh, which is based in Dorsten, Germany and Chesterfield Special Cylinders Inc. which is based in Houston, USA 


Alternative Energy

     Greenlane Biogas, Vancouver, Canada and Sheffield, UK; acquired in October 2014 

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Proposed sale of Greenlane Biogas - RNS