Flow battery developer RedT has outlined terms for a proposed merger with Avalon Battery Corporation and the parties have signed a non-binding memorandum of understanding (MoU).
The merger, if approved by shareholders and completed, will constitute a reverse takeover under the London Stock Exchange’s Alternative Investment Market (AIM) rules for companies.
In accordance with rule 14 of the AIM rules, trading in RedT’s ordinary shares on AIM are suspended until either the publication of an admission document in relation to the merger or confirmation is given that the merger is no longer proceeding.
Both RedT and California-headquartered Avalon operate in the vanadium redox flow battery (VRFB) sub-segment of energy storage.
Combining the businesses will create a global VRFB player with operations in North America, Europe and the Asia-Pacific.
In October last year RedT announced it would seek strategic partners to support and finance the continued growth of the business and stated in March that it was in discussions with interested parties.
The MoU sets out the basis upon which the two businesses, subject to a number of conditions, intend to form the VRFB company.
The merger will take the form of a share-for-share acquisition of Avalon by RedT.
The new company will seek re-admission to trading on the AIM market of the London Stock Exchange for its ordinary shares including those to be issued to Avalon shareholders.
To drive the growth and development and provide working capital the merged business intends to raise at least £24m (€26m) of new funds.
VSA Capital, RedT’s financial adviser and broker, RedT and Avalon have received preliminary support for the fundraising from a new strategic investor that intends to make a cornerstone investment in the merged business, as well as from existing institutional investors in RedT and both existing and certain proposed new investors in Avalon.