SolarBank Corporation has closed its previously announced acquisition of control of two corporations that hold solar projects located in Ontario with a combined capacity of 2.5 MW (the “Projects”). The corporations OFIT GM Inc. and OFIT RT Inc. (the “Purchased Entities”) were acquired pursuant to the terms of share purchase agreements (the “SPAs”) dated October 23, 2023. SolarBank has issued 278,875 common shares (the “Consideration Shares”) of SolarBank at a deemed value of $7.70 per share to the vendors (N. Fine Investments Limited and Linden Power Inc.) to complete the acquisition of the Purchased Entities (the “Transaction”). The Purchased Entities have been operating the Projects since 2017.
“I am very pleased to have completed the acquisition of these projects and our continued growth as an independent power producer,” said Dr. Richard Lu, CEO of SolarBank. “These are long life assets that have favorable feed in tariff rates until 2036 and these projects aren’t just power sources; they are beacons of sustainability, generating not only electricity but also long-term, recurring revenue that will empower us to continue driving positive change.”
Pursuant to the terms of the SPAs, SolarBank acquired 49.9% ownership of OFIT RT Inc. where Whitesand First Nation owns the remaining shares of OFIT RT Inc. The Company also acquired 49.9% ownership of OFIT GM Inc. where the Town of Kapuskasing owns the remaining shares of OFIT GM Inc. All voting shares of the Purchased Entities are now owned by SolarBank.
Dr. Richard Lu, the President & Chief Executive Officer and a director of the Company is indirectly a shareholder of the Purchased Entities and has indirectly received one-third of the Consideration Shares. As a result, the Transaction is considered a related party transaction within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”). The Transaction is exempt from the formal valuation requirements, the minority shareholder approval and information circular requirements of MI 61-101 pursuant to sections 5.5(a) and 5.7(1)(a) of MI 61-101, as neither the fair market value of the consideration to be issued under the Transaction nor the consideration to be paid to the Dr. Lu will exceed 25% of the Company’s market capitalization. The Company will not file a material change report related to this Transaction more than 21 days before the expected closing of the Transaction as required by MI 61-101 since the Company needed to close on an expedited basis for sound business reasons. The securities of the Company that were acquired by the related party were acquired pursuant to an exemption from the prospectus requirement in section 2.12 of National Instrument 45-106.
The Company will pay a cash advisory fee equal to 5% of the value of the Transaction to an arm’s length third party.
