InfraStrata enters term sheet for acquisition of regasification project

Strategic infrastructure company InfraStrata has entered into a term sheet with West Face Long Term Opportunities Global Master, it announced on Thursday, for the acquisition of Meridian Holdings, under which sits the proposed floating storage and regasification unit (FSRU) project in Barrow-in-Furness, north west England.

The AIM-traded firm said estimated project revenues were in the region of £80m to £10m annually, with a project life of between 25 and 30 years.

Total consideration payable to the vendor at final investment decision, on which the deal was conditional, would be £8m.

Additionally, 60 million warrants over ordinary shares in the capital of InfraStrata, with a two-year expiry, would be issued to the vendor at final investment decision, with an exercise price of 5p - a 12x multiple to the current share price.

Where final investment decision was not taken, no amounts would be payable, and no warrants would be issued to the vendor, the board said.

A sale and purchase agreement would be executed on or before 31 July, with final investment decision currently expected to be taken within 36 months of execution of that agreement.

Discussions with key partners had started, with a consortium of companies involved in the development, construction, operations and commercialisation of regasification terminals to be formed in due course.

Offtake discussions, geared towards long-term capacity offtake, had also begun with “leading” liquefied natural gas (LNG) trading houses.

“I am very pleased that we have now signed this term sheet, leading to the formal sale and purchase agreement over the course of the next couple of months,” said chief executive officer John Wood.

“This is the culmination of many months of hard work by the InfraStrata team.

“The continued traction that we have been receiving from global players within the LNG markets since the day we announced the exclusivity agreement last year, validates our belief that this FSRU project is strategic and crucial to the UK's future natural gas supplies.”

Wood said that, as the world moved towards a more decarbonised economy, natural gas would be the transitional “fuel of choice”, with LNG playing the role of balancing natural gas and power markets by acting as baseload feedstock for power generation, and providing peak shaving capabilities.

“The intermittency of power generation from wind and solar means natural gas will continue to be the fuel of choice for at least the next few decades.

“We, therefore, continue to remain focussed on energy infrastructure projects like the FSRU project which have a long life, robust economics and provide security of energy supply to the UK whilst casting our eye on future scenarios involving the likes of hydrogen and other new technologies.”

At 1318 BST, shares in InfraStrata were down 6.72% at 0.39p.