Anaergia, a company focused on converting organic waste into renewable natural gas, fertilizer, and water, has sold projects in Italy to asset management firm Arjun Infrastructure Partners. The move is aimed at reducing capital requirements and improving balance-sheet liquidity for Anaergia.
Positive Market Response
Following the announcement, Anaergia's shares experienced a significant jump in value. In morning trading, the shares surged by 19% to C$0.42, narrowing the year-to-date drop to 90%.
Acquisition of Ownership and Control
Under the agreement, Arjun will acquire full ownership and control of six assets in Italy. Some of these assets require immediate additional capital to become operational, which exceeds what Anaergia can currently obtain through its lending facilities.
Termination of Loan Obligations
To facilitate the sale, entities managed by Arjun will assume approximately 145 million Canadian dollars ($107.2 million) in loan obligations owed by Anaergia. In return, Anaergia will transfer approximately C$55 million in inter-company loans and equity interests in a subsidiary that oversees the projects.
Capital Funding and Operation Support
Through this deal, Anaergia will no longer be responsible for providing additional capital to these projects. Arjun, on the other hand, will have the resources to fund and advance the projects towards commercial operation.
Future Strategic Review
Prior to this transaction, Anaergia's board had already approved the engagement of financial advisors to conduct a strategic review. This review includes exploring options such as raising additional financing, selling certain assets, and considering privatization, reorganization, or restructuring of the company.