Pioneer Reaches Agreement to Sell Transformer Business for Approximately $65 Million
CSA Z463 Electrical Maintenance
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Pioneer Power Solutions Transformer Sale sees a $65.5M divestiture to Mill Point Capital, a private equity firm, via cash and a seller note, while Pioneer retains generator services, switchgear, and data center power solutions.
Key Points
A transaction where Pioneer sells transformer units to Mill Point Capital for $65.5M in cash and notes.
✅ $60.5M cash plus $5M seller note, liabilities assumed
✅ Retains Critical Power and Custom Electrical Products
✅ Focus on switchgear and generator businesses post-close
Pioneer Power Solutions, Inc. (PPSI) ("Pioneer" or the "Company"), a company engaged in the manufacture, sale and service of electrical transmission initiatives such as the Transource project in Missouri and distribution and on-site power generation equipment, has announced that it has reached an agreement to sell its liquid filled and dry type transformer businesses to Mill Point Capital, a middle-market private equity firm, for $65.5 million in cash and notes.
In consideration for all the assets of Pioneer Transformers Ltd. and Pioneer Dry Type Transformer Group, which includes Jefferson Electric, Inc., Bemag Transformer Inc. and Harmonics Limited LLC, Pioneer will receive $65.5 million, including $60.5 million in cash and $5 million in a seller's note. In addition, Mill Point Capital will assume substantially all the current assets and liabilities, including payables for the acquired entities. As a result, Pioneer will retain:
Pioneer Critical Power, a provider of generators, specialized enclosures, automatic transfer switches, uninterruptible power supplies, batteries, remote monitoring solutions, including initiatives like the NYPA-GE software agreement that enhance grid reliability, and RICE/NESHAP modifications, as well as a full suite of engine generator maintenance services. Service customers include several national retailers and cellular service providers.
Pioneer Custom Electrical Products, a supplier of highly specified and engineered solutions for the electrical power generation industry with special focus on the distributed generation and data center markets, where solutions like NYPA thermal storage success are advancing efficiency.
In addition, Pioneer continues to hold 1.75 million shares and warrants to purchase an additional 1 million shares of CleanSpark, Inc. (CLSK).
Nathan Mazurek, Pioneer's Chairman and Chief Executive Officer, said, "Our belief that our assets were worth more individually than the market valuation of our combined organization is validated by this transaction, wherein we will divest a portion of our business for approximately 1.5x our current market capitalization, while retaining two exciting businesses and our status as a publicly traded Nasdaq listed company. Following the closing of this transaction, we plan to focus on streamlining and enhancing our Titan business in Minneapolis and our switchgear business in Los Angeles. With a strong balance sheet, we should be well positioned to assess our retained businesses, potential opportunities in the energy transition, including trends in wind repowering such as the Wyoming wind farm replacement highlighted recently, and the allocation of resources to best benefit shareholders. I am excited about phase two of Pioneer."
Lincoln International acted as the exclusive financial advisor to Pioneer Power Solutions, Inc. Pioneer management expects the transaction to close in the second half of 2019. The transaction is subject to certain customary closing conditions and Mill Point securing financing for the transaction, reflecting wider energy financing activity such as clean coal technologies funding in the sector. Additional details are provided in filings with the Securities and Exchange Commission.
About Pioneer Power Solutions, Inc.
Pioneer Power Solutions, Inc. manufactures, sells and services a broad range of specialty electrical transmission, distribution and on-site power generation equipment for applications in the utility sector, including entities like OPG financial results in Canada, industrial, commercial and backup power markets. The Company's principal products and services include custom engineered electrical transformers, low and medium voltage switchgear and engine-generator sets and controls, complemented by a national field-service organization to maintain and repair power generation assets, as utilities pursue initiatives like the OPG-TVA nuclear partnership to modernize fleets. Pioneer is headquartered in Fort Lee, New Jersey and operates from 12 additional locations in the U.S., Canada and Mexico for manufacturing, centralized distribution, engineering, sales, service and administration. To learn more about Pioneer, please visit its website at www.pioneerpowersolutions.com.
