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M III Acquisition, IEA Energy Services Agree to Merge
Monday 13 November 2017

13 November 2017 - US-based special purpose acquisition company M III Acquisition Corp. (NASDAQ: MIII) (NASDAQ: MIIIU) (NASDAQ: MIIIW) has entered into a definitive agreement and plan of merger with US-based renewable energy engineering, procurement and construction company IEA Energy Services LLC, the companies said.

IEA Energy Services holds the operating assets of Infrastructure and Energy Alternatives, LLC, a holding company established to acquire and manage industry leading companies delivering infrastructure solutions for the renewable energy, traditional power, and civil infrastructure industries.

The IEA family of companies provides complete engineering, procurement and construction services throughout North America.

Under the terms of the purchase agreement, the aggregate purchase price payable at the closing of the proposed transaction will be USD 255m (subject to certain adjustments).

The purchase price will consist of USD 100m in cash; convertible, redeemable, preferred stock with a liquidation value of USD 35m; 10m shares of MIII common stock, and assumption of approximately USD 20m in capital leases.

In addition, the existing owners will be entitled to receive up to 9m shares of MIII common stock as an "earn-out" based upon IEA's EBITDA for 2018 and 2019.

MIII will be renamed as "Infrastructure and Energy Alternatives, Inc." upon consummation of the merger and is expected to continue to be listed on the NASDAQ Capital Market under the symbol "IEA." 

Following the transaction, IEA will hold all of the existing renewable energy EPC businesses of Infrastructure and Energy Alternatives, LLC, including the Infrastructure and Energy Alternatives family of companies, led by White Construction, Inc. and IEA Renewable Energy, Inc.

The company's existing management team, led by J.P. Roehm, will serve as the continuing management team for IEA, and IEA's headquarters will remain in Indianapolis, Indiana.

Funds managed by the Power Opportunities group of Oaktree Capital Management, L.P. and the IEA management team will hold a significant ownership interest in IEA following the merger.

The company was formed by Oaktree in 2011 in connection with its acquisition of White Construction, a leading United States EPC firm that had established itself with an early presence in the utility-scale, wind farm construction industry.

The company believes that the IEA Businesses hold an industry-leading market share among EPC companies for wind farm construction in the United States.

Through construction of approximately 200 projects, the IEA Businesses have erected more than 7,200 wind turbines which generate more than 14gw of electricity.

The IEA Businesses have a long track record of successfully completing its projects on time and on budget, and the company's safety-first approach, customer responsiveness, and expertise have resulted in more than 80% of annual revenues coming from repeat customers.

IEA expects to build upon its leading market share of the IEA Businesses in wind farm construction and to expand its market share in the construction of utility-scale solar projects to drive organic growth.

As a public company, IEA believes that it will be able to implement its acquisition strategy to drive incremental growth and diversification.

The overall goal is to enhance IEA's position as the leading, publicly-traded, renewables EPC company by expanding its core product offerings in wind and solar construction and broadening the range of services that it offers to its customers.

J.P. Roehm will continue as CEO of IEA.

The cash component of the purchase consideration is to be funded by cash in MIII's trust account established in connection with its initial public offering.

Upon consummation of the transaction, it is anticipated that the Existing Owners will hold approximately 34% of the outstanding common stock of IEA, with the ability to increase that interest to approximately 49.7% of the outstanding common stock of IEA assuming receipt of the full earn-out (excluding, in each case, unexercised warrants and common stock to be received upon any conversion of the convertible preferred stock).

As part of the transaction, the sponsor investors in MIII have agreed to defer vesting of 1.875 m common shares, with 50% of such common shares to vest when the common stock trades at USD 12 per share for any 20 of 30 trading days, and the remainder to vest when such common stock trades at USD14 per share for any 20 of 30 trading days.

Warrants to purchase 7.73 m common shares of MIII at a strike price of USD 11.50 per share will remain outstanding.

The transaction has been unanimously approved by the boards of directors of both the company and MIII and remains subject to the satisfaction of customary closing conditions, including regulatory approval and the approval of MIII's stockholders.

It is expected to close promptly following MIII's special stockholders' meeting to approve the transaction, and the sponsor investors in MIII have agreed to vote all of their shares in MIII in favor of the transaction.

MIII was advised on the transaction by Stifel, Nicolaus and Co Inc., as M and A advisor, Jefferies LLC and Cantor Fitzgerald and Co., as Equity Capital Markets advisors. Kirkland and Ellis LLP and Ellenoff Grossman and Schole LLP served as legal counsel to MIII.

The company was advised by FMI Capital Advisors Inc., as financial advisor, and Paul, Weiss, Rifkind, Wharton and Garrison LLP, as legal counsel.
Date Published: 13/11/2017
Target: IEA Energy Services
Country: USA
Deal Size: 255m (USD)
Sector: Alternative Energy
Type: Corporate acquisition
Financing: Cash and Stock
Status: Agreed
Buyer: M III Acquisition Corp
Buyer Advisor: Stifel, Nicolaus and Co , Jefferies LLC , Cantor Fitzgerald and Co , Kirkland and Ellis , Ellenoff Grossman and Schole