Etrion Corporation ("Etrion" or the "Company") (TSX: ETX) (OMX: ETX), a solar independent power producer, has closed a multi-step transaction to create significant value across its Japanese solar portfolio. Etrion acquired the minority interests of Hitachi High Technologies ("Hitachi High-Tech" or "HHT") and Tamagawa Holdings ("Tamagawa"), optimized the related Japanese corporate structure and renegotiated the operations and maintenance ("O&M") contracts for Etrion's 56.8 megawatt ("MW") solar portfolio in Japan.
Etrion purchased HHT's minority ownership in all four of its solar projects, as well as Tamagawa's share in the Misawa 9.5 MW project, for a total of USD 4.4 million. As a result, Etrion's net solar capacity increased from 47.0 MW to 56.8 MW. In addition, the O&M contracts originally provided by HHT were re-negotiated on better terms and transferred to other companies within the Hitachi group. Etrion has taken over two asset management contracts from HHT as of January 2020 in order to provide asset management services to all of Etrion's four solar projects. Finally, the entire Etrion solar portfolio was transferred into a so-called "TK-GK" structure, which is currently the Japanese market standard that results in enhanced cash flow distributions and other benefits. As part of the transaction, the project debt in the Mito 9.3 MW project was increased by 295 million JPY (USD 2.7 million) to pay for the transaction costs and fees, to be repaid with the remainder of the existing loan within the original tenor.
Management Comments
Marco A. Northland, Etrion's Chief Executive Officer, commented: "I am very happy to announce this important milestone after a year of hard work by the entire Etrion team. We are simplifying our operations, maximizing our project economics, increasing our net capacity and creating significant shareholder value."
