Vanadium producer Bushveld Minerals has offered its backing to the merger of UK energy storage provider redT with US vanadium redox flow battery maker Avalon Battery, providing a loan to help the deal get over the line – and to help its own vertical integration ambitions.
This summer, the two companies said they plan to create a “global partnership” in long duration energy storage through what is technically a reverse takeover, with redT making a share-for-share acquisition of Avalon.
The latter is provider of flow battery systems to solar tracking system and integrated PV power plant company NEXTracker for its NX Flow solution. NEXTracker CTO Alex Au said in an August interview for this site that with the growing trend for longer duration, ‘baseload’ storage, the redox flow battery “has really unlocked a lot of opportunities,” essentially having a “degradation profile better than a solar panel,” Au said, potentially making it a competitive technology of choice in the next step for higher shares of renewables integration.
Meanwhile redT has achieved a number of milestones, including recently becoming the first flow ‘machine’ provider to prequalify to provide some grid-balancing services in the UK. Despite seeming success in deploying a number of systems, first through pilots and then a variety of business models, RedT’s financial future had been reported as uncertain prior to the takeover announcement, with the company requiring additional funding to see it through and shares are currently suspended from being traded on the London Stock Exchange.
The pair need to raise US$30 million or more in new funds, with the merged entity to be AIM-traded in London. Bushveld Minerals, which owns a controlling interest in existing primary vanadium mining and processing and other projects underway to greatly expand from the vast complex it operates in South Africa, is seeking to vertically-integrate with involvement in the flow battery market and has stepped in. The company will provide a US$5 million convertible loan to Avalon, half of which will then be loaned to redT, helping to pay for due diligence and other costs incurred.
In return, Bushveld will have opportunities via the right of first refusal to supply projects for the new company for at least two years, while Bushveld will also earn interest on the loan and take a stake in ownership – the loan will convert into shares in the merged entity on successful completion of the merger, with Ordinary Shares to be “issued at a maximum price of 1.65p (US$0.021) per Ordinary Share and on the same terms as other investors participating in the Fundraising,” a statement from redT to the London Stock Exchange said. RedT said it “expects that the Company will have sufficient cash to complete the Merger and the Fundraising process in the first quarter of 2020.”