Change of ownership ahead for Pinnacle Renewable Energy

A vessel takes on pellets from the Westview Terminal
on the Prince Rupert waterfront

One of British Columbia's forestry new era giants is about to be acquired by British interests, with Pinnacle Renewable Energy announcing yesterday that it has entered into an agreement with the Drax Group from the United Kingdom and it's Canadian subsidiary, with Drax Power Ltd. set to acquire  controlling interest of Pinnacle before the fall of this year.

The estimated value of the all cash transaction is said to be at 831 million dollars as well as the assumption of net debt of Pinnacle.

Pinnacle's CEO. Duncan Davies observed. how the move will create a global leader in the biomass industry.

"Pinnacle's Board of Directors has unanimously determined that the Transaction represents the best course of action for the Company and its shareholders. On closing, the Transaction will deliver immediate, significant and certain cash value to our shareholders. At the same time, the combination of Pinnacle and Drax will create a global leader in sustainable biomass with the vision, technical expertise and financial strength to help meet the growing demand for renewable energy products around the world."

For the new owners, the acquisition of Pinnacle is being hailed as a step for Drax towards along term future for sustainable biomass development. It will also provide Drax with a stable supply for their power station requirements in England.

"I am excited about this deal which will reinforce Drax's position as the world's leading sustainable biomass generation and supply business, delivering against our strategy to increase self-supply, reduce our biomass production cost and create a long-term future for sustainable biomass. We expect to benefit greatly from Pinnacle's operational and commercial expertise, and I am looking forward to what we can achieve together." -- Will Gardiner, Chief Executive Officer of Drax 

Drax expanded on what the deal will mean for their future ambitions in biomass with some highlights of the acquisition:

There are still a few steps before the British interests take control of their Canadian investment.

In addition to Pinnacle and Drax shareholder approvals, the Transaction is subject to other closing conditions including governmental and regulatory approvals as well as the approval of the Supreme Court of British Columbia. 

The Transaction is not subject to a financing condition and is expected to close in the second or third quarter of 2021.

In Prince Rupert, Pinnacle operates the Westview Terminal which has recently seen increasing shipment numbers for pellets destined for Asian and European markets. The company also operates a number of pellet manufacturing facilities across Northwestern BC, as well as operations elsewhere in BC, Alberta.

Additionally Pinnacle has in recent years made a significant push into the United States, including an investment into a pellet facility in Alabama.

The acquisition of Pinnacle by the British corporation makes for a good fit them, with much of their current volume of shipments destined for the United Kingdom, it would also give Drax a solid footing for export opportunities in the Asian theatre.

The full statement from Pinnacle can be reviewed here.

Drax expands on their enthusiasm for the deal with this statement

For more notes on the Pinnacle facility in Prince Rupert see our archive page here.

Cross posted from the North Coast Review.