Additional Quench and Seven Seas Water Transactions Announced
TAMPA, Fla., Feb. 15, 2018 /PRNewswire/ — AquaVenture Holdings Limited (NYSE: WAAS) (“AquaVenture” or the “Company”), a leader in Water-as-a-Service™ (“WAAS™”) solutions, today announced that it has entered into a binding agreement with Abengoa Water, S.L.U. (“Abengoa”) to purchase a majority interest in a desalination plant in Accra, Ghana. The plant has the capacity to deliver approximately 18.5 million gallons (60,000 m3) per day of potable water to Ghana Water Company Limited (“GWCL”) under a long-term, U.S. dollar denominated water purchase agreement. Political risk insurance is provided to the project lenders and project equity sponsors by Multilateral Investment Guarantee Agency (MIGA), a division of the World Bank. The facility has been operational since 2015 and, through its customer, supplies water to approximately 500,000 residents of Accra. The base purchase price for this interest is approximately $26 million, subject to adjustment in accordance with the purchase agreement. Completion of the purchase, which is expected to occur by the end of the second quarter of 2018, is subject to the satisfaction of certain conditions precedent.
Doug Brown, Chairman and CEO of AquaVenture Holdings, commented: “We are excited about this project. This will be our first desalination plant in Africa. The acquisition will expand our base of facilities that provide WAAS solutions to our customers. We look forward to working with the project stakeholders in completing the various conditions to closing and becoming a long-term partner to the Government of Ghana for water treatment and services.”
The transaction is structured as the purchase of the entire share capital of Abengoa’s subsidiary that holds a 56% economic interest in Befesa Desalination Developments Ghana Limited (“BDDG”), the Ghanaian company that owns the plant. The purchase price is subject to adjustment based on the results of negotiations with GWCL regarding changes to the water purchase agreement and with BDDG’s lenders regarding the existing financing arrangements, among other things. Closing conditions include (i) the receipt of required approvals from BDDG’s other shareholders and Abengoa’s lenders, as well as those required under BDDG’s financing arrangements, (ii) the execution of a legally binding heads of terms among the Government of Ghana, GWCL and BDDG in which the parties agree to revise the water rates charged under the water purchase agreement and the indexation of those rates, (iii) the receipt of the approval of the credit committees of BDDG’s lenders to changes to the terms and conditions of BDDG’s financing arrangements, and (iv) there being no material breach by BDDG under the project or financing documents, as well as certain other customary closing conditions.
AquaVenture Holdings has also offered to purchase the remaining 44% economic interest in BDDG on the same principal terms and is in active negotiations with that shareholder.
The Company has also entered into an agreement to purchase a SWRO desalination plant in Long Island, The Bahamas for a purchase price of approximately $3.0 million, subject to adjustment in accordance with the purchase agreement. The plant has the capacity to deliver approximately 200 thousand gallons per day of potable water to the Water and Sewage Corporation (“W&SC”) of The Bahamas under a long-term water purchase agreement. This deal is expected to close within the next two months, after satisfaction of customary closing conditions, including the approval of the Central Bank of The Bahamas.
On January 12, 2018, Quench acquired substantially all the point-of-use water filtration assets of Clarus Services and Watermark USA. These asset acquisitions added approximately 1,500 units to Quench’s installed asset base primarily in the Richmond, Virginia and Philadelphia, Pennsylvania markets at an aggregate purchase price of $1.6 million.
Tony Ibarguen, President of AquaVenture Holdings, commented: “We are excited about these additional acquisitions which highlight the continued execution of our strategy. At Seven Seas Water, our leadership presence in the Caribbean desalination market makes the Long Island acquisition a great fit. And at Quench, we continue to drive consolidation in the highly fragmented point-of-use water market in North America, at attractive valuations.”
Conference Call and Webcast Information
AquaVenture will host an M&A update conference call on Thursday, February 15, 2018 at 5:00 p.m. EDT. Interested parties are invited to listen to the conference call by dialing 1-877-407-0789, or, for international callers, 1-201-689-8562 and ask for the AquaVenture conference call. Replays of the entire call will be available through February 22, 2018 at 1-844-512-2921, or, for international callers, at 1-412-317-6671, conference ID #13676676. A webcast of the conference call will also be available through the Investor Relations section of the Company’s website, www.aquaventure.com. A copy of this press release is also available on the Company’s website.
AquaVenture is a multinational provider of WAAS™ solutions that provide customers a reliable and cost-effective source of clean drinking and process water primarily under long-term contracts that minimize capital investment by the customer. AquaVenture is composed of two operating platforms: Quench, a U.S.-based provider of Point-of-Use, or POU, filtered water systems and related services to approximately 40,000 institutional and commercial customers; and Seven Seas Water, a multinational provider of desalination and wastewater treatment solutions, providing approximately 8 billion gallons of potable, high purity industrial grade and ultra-pure water per year to governmental, municipal, industrial and hospitality customers.
Safe Harbor Statement
This release contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and of Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this release do not constitute guarantees of future performance. Investors are cautioned that statements in this press release regarding management’s future expectations, beliefs, intentions, goals, strategies, plans or prospects, including, without limitation, statements relating to AquaVenture’s ability to complete the proposed acquisitions on the terms or in the timeframes currently expected, expected purchase price adjustments, the ability of the conditions to closing to be satisfied or waived, BDDG’s ability to successfully negotiate a legally binding heads of terms with the Government of Ghana and GWCL regarding changes to the water purchase agreement, BDDG’s ability to successfully negotiate changes to the financing terms and conditions of its debt agreements, and AquaVenture’s ability to successfully negotiate the purchase of the remaining 44% economic interest in BDDG. Forward-looking statements can be identified by terminology such as “anticipate,” “believe,” “could,” “could increase the likelihood,” “estimate,” “expect,” “intend,” “is planned,” “may,” “should,” “will,” “will enable,” “would be expected,” “look forward,” “may provide,” “would” or similar terms, variations of such terms or the negative of those terms. Such forward-looking statements involve known and unknown risks, uncertainties and other factors including those risks, uncertainties and factors detailed in AquaVenture’s filings with the Securities and Exchange Commission. As a result of such risks, uncertainties and factors, AquaVenture’s actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. AquaVenture is providing the information in this press release as of this date and assumes no obligations to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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