New York-based blank cheque firm Millennium Investment & Acquisition Company (MIAC), formerly known as Millennium India Acquisition Company Inc and created as a special purpose acquisition company (SPAC) to invest in India, has signed an asset purchase agreement for a potential acquisition of an activated carbon biomass plant in the US, as part of its plans to focus on alternative energy assets.
The target plant had started operations in 2011, but failed to achieve full commercial operations and generate profits, and was closed in 2012. The biomass facility represents an investment of around $50 million made during the years 2009 to 2012.
Currently, the plant is under bankruptcy protection and the agreement was signed between MIAC and the bankruptcy trustee. The closing of the proposed acquisition of the plant is subject to remaining conditions precedent.
“This acquisition, if completed, will be consistent with MIAC’s objective of seeking to acquire assets on an attractive risk-adjusted return basis in the alternative energy business and related industries,” David Lesser, MIAC’s chairman and CEO, said in a press statement.
MIAC said it would acquire 100 per cent of the project at a small fraction of its original cost.
“As we described in the proxy materials, MIAC intends to expand its investment portfolio and diversify its investment base away from its single investment in SMC Global. Overall, I believe that we have identified an interesting investment niche in alternative energy and look forward to announcing additional alternative energy transactions in the near future,” added Lesser.
The company is looking to finance the project via a mix of debt and equity and expects that the plant should generate reliable cash flow after an initial investment and ramp-up to stabilised commercial operations.
Founded in 2006, MIAC was among the handful of SPACs which raised public money in the US and Europe to invest in Indian assets during the bull run of 2005-07.
The firm had recently overhauled its board of directors and decided to change its India-focused investment strategy after its sole investment in the country went deep underwater.
After raising $58 million in the American Stock Exchange (now NYSE MKT) it had bet on Delhi-based stock broking firm SMC Global Securities Ltd. MIAC had put in Rs 164 crore in 2007 in two SMC Group firms, SMC Global and SAM Global Securities, of which Rs 136 crore went to SMC Global. This investment was at the peak of the bull market in 2007 after which valuations of broking firms tanked.
SMC Global was looking to go public in India and had got SEBI nod to go ahead with the issue last May, but the virtual shut down of the primary market punctured the plan. SMC Global has decided to withdraw its proposed IPO extending the proposed public float deadline to March 31, 2015.
Meanwhile, the SMC Global promoter group had bought back 1 per cent stake out of total 14 per cent holding of MIAC and has signed an agreement to buy another 1 per cent by September 2015, if the proposed IPO doesn’t go through.
(Edited by Joby Puthuparampil Johnson)