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Westinghouse Solar Announces Letter of Intent for Merger with CBD Energy

published: 2012-02-17 15:10

Westinghouse Solar, Inc. (Nasdaq:WEST), a designer and manufacturer of solar power systems, announced that it has signed a letter of intent to pursue a business combination with CBD Energy (ASX:CBD.AX), a diversified renewable energy company based in Sydney, Australia. Key terms of the transaction have been approved by the boards of directors of both companies, subject to satisfactory completion of due diligence and definitive agreements. The companies are targeting prompt execution of definitive documents in early March and a third quarter closing date, subject to shareholder approvals and other customary closing conditions. The contemplated transaction structure would be effected solely through an exchange of shares. In a separate press release, Westinghouse Solar today also announced its fourth quarter and full year 2011 financial results.

"Out of our discussions with CBD Energy since they made an investment in December 2011, we have concluded that a merger will produce synergies between the two companies and create a larger, diversified business with competitive advantages in the renewable energy sector," said Barry Cinnamon, CEO of Westinghouse Solar. "We are very excited about the international growth opportunities that this transaction will create for the combined enterprise and the potential benefits for the shareholders of both CBD and Westinghouse Solar."

"The United States is forecast to be one of the largest markets for solar energy generation in the next few years. Consequently, CBD has been looking for a point of entry into the US market for some time and believes that the acquisition of Westinghouse Solar is an ideal fit for that purpose," said Gerry McGowan, CEO of CBD Energy. "Moreover, the Westinghouse Solar technology and product suite appear to have immediate applicability to CBD's Australian residential market that we hope will yield improvements in market share and profitability. The combination of synergies is expected to result in the prospective transaction being accretive to CBD earnings from consummation, and throughout our 2013 fiscal year."

Under the terms conditionally approved by the Westinghouse Solar and CBD Boards of Directors and outlined in a letter of intent ("LOI"), Westinghouse Solar shareholders would receive shares of common stock in CBD Energy in exchange for their shares of Westinghouse Solar. The terms of the LOI would result in the current holders of equity securities of CBD owning 85% of the combined company common stock, and the equity holders of Westinghouse Solar (on a fully diluted basis, including convertible securities, options and warrants) owning 15% of the combined company common stock, prior to the effect of any future capital financing transactions by either company. CBD intends to apply for listing on the Nasdaq Stock Exchange prior to consummation of the transaction. Although the key terms of the LOI are non-binding and subject to change, the LOI includes binding provisions granting CBD exclusivity to negotiate a definitive agreement and breakup fees applicable under certain circumstances.

Chardan Capital Markets, LLC is the exclusive financial advisor to CBD in connection with the proposed transaction.

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