Nine years after Aspen Group Ltd.'s (TASE:ASGR) entry into the environmentally friendly energy market, the group is now on the way out. Aspen notified the TASE today that it had signed an agreement to sell 49% of this activity, under the Aspen Solar name, to Noy Infrastructure and Energy Investment Fund 2 for NIS 55 million, with an option to sell the remaining 51% to Noy 2 later. Completion of the deal, scheduled by the end of the year, is contingent on several conditions.
Aspen believes that the first part of the deal will increase its equity, which totaled NIS 450 million at the end of the first quarter, by NIS 12 million, and that it would yield the company NIS 53 million in free cash flow, which it will use to reduce its leverage and for investing in its core business of income-producing real estate.
The company is also predicting that exercising its sale option will provide it with NIS 57 million more in cash flow, making a total of NIS 110 million, and increase its equity by another NIS 12 million. If Aspen does not exercise its option, Noy Fund 2 will have the right to purchase the remaining shares.
Noy Fund still investing in energy
Aspen Solar currently owns 273 small solar energy facilities around Israel with a capacity of up to 50 kilowatts each and an aggregate capacity of 14 megawatts. Through a Dutch subsidiary, Aspen also owns a solar park in southern Italy with a one-megawatt capacity.
According to the agreement between the parties, Aspen has an option, at its sole discretion, to demand that Noy 2 Fund purchase the remaining shares in Aspen Solar within two years of the date on which the first stage of the deal is completed at a price "to be calculated according to the formula set forth in the agreement."
For the Noy Fund 2, managed by chairman Pinchas Cohen, managing partner Ran Shelach, and managing partner Gil-ad Boshwitz, the deal is a continuation of its strategy of investing in renewable energy. It already became a leading player in this field with the Noy Fund 1, with an emphasis on solar business.
Aspen explained that the sale "had been made according to the company's business strategy and goals for the coming year of selling all or part of its holdings in environmentally friendly energy in Israel, and focusing on income-producing real estate."
In September 2008, Aspen decided to consider a possible entry into environmentally friendly energy, and began making deals two years later. Just under a year ago, in May 2016, Aspen announced that it was considering the sale of its solar business, and reported having received a number of offers for the acquisition, and negotiations with various investors.
In 2015-2016, Aspen's revenue from solar energy totaled NIS 35-36 million a year, accounting for 17% of its total revenue of NIS 192-193 million a year. Aspen's annual gross profit from solar activity was NIS 12 million, with an operating profit of NIS 12-12.5 million a year. The company's revenue from solar business in the first quarter of this year rose 7% to nearly NIS 8 million, and its quarterly gross profit shot up 40% to NIS 2 million.
Published by Globes [online], Israel Business News - www.globes-online.com - on August 3, 2017
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