Key points:
- SIMEC Atlantis shares fell after selling a stake in the tidal energy division.
- The company will continue to operate its MeyGen tidal power project.
- The move comes as the tidal energy industry matures.
The SIMEC Atlantis Energy Ltd (LON: SAE) share price fell after selling a majority stake (about 79%) stake in its Advanced Tidal Engineering and Services division (ATES) to Proteus Marine Renewables Limited.
The news initially triggered a rally higher in SAE shares that was soon followed by a decline into negative territory as investors fully processed the impact of the sale. The company told investors that the sale does not affect its shareholding in the MeyGen site despite the division being responsible for the design of Atlantis’ tidal turbines to date, including the deployment and recovery of all turbines at the MeyGen site.
Also read: Five Best Green Energy Stocks In 2022.
SIMEC retained its majority ownership of the MeyGen site, which includes the entire project development rights and the four turbines currently deployed at the MeyGen site, which MeyGen plc still owns.
SAE clarified that the divestiture was necessary because it wants to reduce its overall operating costs, a significant amount of which was tied to ATES, which will now have a new majority owner. SIMEC retailed a minority 21% stake in the company, which will rebrand to Proteus. The two companies will continue working together under a collaboration agreement.
The two companies have also signed additional contracts to ensure that Proteus continues supporting the MeyGen operating turbines. In addition, SIMEC will receive a cash consideration of £500,000 from the sale and a further payment of up to €0.5 million if Proteus secures the financial close of the Raz Blanchard project.
SIMEC Atlantis told investors that it will save a significant amount of its current operations costs and will be able to deploy the savings into developing some of its key projects. The sale also allows SIMEC to attain its goal of becoming a sustainable energy and battery storage project developer.
The company pointed out that the tidal energy industry had matured, presenting a perfect opportunity to separate its two businesses, which it has done. SAE will continue implementing the recent 28 MW MeyGen CFD award.
*This is not investment advice.
SIMEC Atlantis (SAE) share price.
The SIMEC Atlantis share price fell 3.6% to trade at 1.160p, from Friday’s closing price of 1.204p.
