Shift in energy focus
Parkmead buys farmland in strategic move into renewables
Tom Cross: shareholding increases
Gas explorer and producer Parkmead, which is focused on the UK and Netherlands, is moving into the renewables sector after acquiring Pitreadie Farm, a company owning extensive farmland and sites in Scotland.
The £4.9 million deal payable in shares will give Parkmead with “significant renewable energy opportunities”. The Aberdeen-based company, headed by former Dana chief Tom Cross, has identified potential for the installation of numerous wind turbines, a solar farm and a biomass production facility on the 2,320 acres. One of the large acquired sites is adjacent to a major operational wind farm.
Parkmead said the acquisition broadens its operations and will add a third revenue-generating business area to the Group. As a result of the acquisition, the shareholding of Mr Cross and his affiliates will increase from approximately 19.05% to 25.97%
The acquisition will be entirely satisfied by the issue of 9,645,669 new ordinary shares of 1.5 pence each. Parkmead will also assume £3.6m of Bank of Scotland debt currently held by Pitreadie.
The offer calculation is based on the closing mid-market price per share of 50.8 pence on 29 August, being the last trading day prior to this announcement. The deal includes the repayment of a director’s loan of £4.3m.
The land and property assets alone, being acquired, assuming no upside from renewable opportunities, were valued at £7.59 million by CKD Galbraith. As at 31 July 2019, the total assets of Pitreadie, including plant machinery and stock, were valued at £8.64m.
Parkmead said it recognises the transition that is taking place in the energy market. In light of these energy market factors, it transitioned to a gas-only producer in January 2016 and the group has increased its gas production almost tenfold since 2014.
It believes that now is the optimum time to broaden its low-cost, low-carbon operations. “The renewables sector is a natural expansion of Parkmead’s operations and is fully in line with the Group’s strategy to increase the balance of Parkmead’s portfolio,” it said.
Parkmead’s Independent non-executive directors, Philip Dayer and Iain Rawlinson, commented: “This acquisition is directly in line with Parkmead’s strategy. It positions the Group very well for balanced growth by making a first step into the renewables sector. These assets have significant onshore wind energy potential.
“There is an active market for land assets in Scotland, particularly those with renewable energy potential.”
Chief Financial Officer, Ryan Stroulger, commented: “The acquisition strengthens the group by adding quality assets with very significant renewable energy potential.