U.K. utility buying Pinnacle Renewable Energy

Mar 24, 2021 | 5:00 AM

Pinnacle Renewable Energy could soon have a new owner.

The company is being bought by Drax Group and its subsidiary, Drax Canadian Holdings, in an all-cash transaction valued at C$831 million. The deal should be complete next month.

Drax, which is based in the United Kingdom, is a phasing out coal fired power generation in favour of wood pellets, and is currently one of Pinnacles largest customers.

“I am excited about this deal which positions Drax as the world’s leading sustainable biomass generation and supply business, progressing our strategy to increase our self-supply, reduce our biomass production cost and create a long-term future for sustainable biomass,” Will Gardiner, Chief Executive Officer of Drax, said in a news release.

Pinnacle currently operates eight wood pellet production facilities throughout western Canada including in Lavington, and one production facility in Alabama. Pinnacle’s Canadian production facilities are all located on major rail lines allowing for transport to one of two shipping terminals on the B.C. coast: Pinnacle’s Westview terminal in Prince Rupert and the Fibreco Terminal at the Port of Vancouver. The company’s Alabama production facility uses shipping facilities on the U.S. Gulf Coast.

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Wood pellets loaded onto vessel at Westview Terminal in Prince Rupert.

“Pinnacle’s Board of Directors has unanimously determined that the transaction represents the best course of action for the company and its shareholders,” Duncan Davies, Chief Executive Officer of Pinnacle, said. “On closing, the transaction will deliver immediate, significant and certain cash value to our shareholders. At the same time, the combination of Pinnacle and Drax will create a global leader in sustainable biomass with the vision, technical expertise and financial strength to help meet the growing demand for renewable energy products, which is exciting for our employees, customers and others around the world,” Davies said.

The combined company would include 17 pellet plants, four deep water sea ports and 4.9 million tonnes of production capacity by 2022.

Pinnacle has nearly 500 North American employees, with about half located in B.C.

Shareholders of both companies must still ratify the deal, with completion expected by mid-April.

by Kevin Rothwell

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