Archaea Energy Inc., an industry-leading renewable natural gas (RNG) company, today announced that its wholly owned subsidiary, Archaea Infrastructure, LLC, has entered into a definitive purchase and sale agreement with Riverview Investment Holdings LLC, an affiliate of Castleton Commodities International LLC, to purchase NextGen Power Holdings LLC for $215 million in cash, subject to customary adjustments at closing.
The transaction is expected to close on or after July 1, 2022.
Transaction Highlights:
- Significant addition to Archaea’s backlog of attractive RNG development opportunities via acquisition of existing electricity generation assets
- INGENCO asset platform includes 14 operating landfill gas to electric (LFGTE) plants at sites which had combined gas flows into the facilities of 7 million MMBtu in 2021
- Acquisition includes gas rights for these sites, which have a number of existing long-term agreements in place
- Asset base located on landfills with strong growth potential and permitted waste acceptance for over 40 years on average across sites
- Archaea expects to build RNG facilities on the majority of these LFGTE sites over time, materially expanding the earnings power of the asset base and of the Company
- Adding approximately 70 INGENCO employees, who will add valuable expertise to Archaea’s highly skilled and experienced team
- Estimated pro forma multiple of approximately 6X total capital expenditures, including acquisition and RNG development costs, to estimated long-term annual Adjusted EBITDA1 associated with the INGENCO assets
- Estimated pro forma long-term annual RNG production of approximately 6 million MMBtu and estimated net annual electricity generated of over 500 thousand MWh once development projects associated with the INGENCO assets are completed and ramped to full flows
- Opportunities for additional upside to estimated long-term annual Adjusted EBITDA through initiatives such as improving heat rates and increasing landfill gas flows into facilities
“Today’s announcement marks a significant achievement in executing on our strategy of securing as many economically attractive RNG development opportunities as possible, building the biggest and highest quality RNG development backlog in the industry, and growing the long-term earnings power of our business,” said Nick Stork, Archaea’s Co-Founder and Chief Executive Officer. “The INGENCO platform provides an opportunity set of high-quality projects for our in-house technical and project development professionals to develop and generate compelling returns by building high margin RNG facilities using our Archaea V1 plant design while also exploring opportunities to optimize the existing electricity generation infrastructure.”
Archaea expects to finance the acquisition of INGENCO, subject to market conditions and other factors, via one or more capital markets transactions or private financing transactions.
