Enersense has agreed on an investment in and preferred supplier status with P2X Solutions Oy, Finland’s first green hydrogen production company

Enersense International Plc  
Insider information, 8 December 2021 at 11:30 a.m.

EnersenseInternationalPlc(“Enersense”), a creator of zero-emission energy solutions,has on 8 December 2021signed an agreement on an equity investment of EUR13–18million in P2XSolutionsOy(“P2X”), a green hydrogen production company. Enersense will, subject to the completion of the investment, subscribe for new shares in P2X so that its holding in P2X will be around 16.3–22.5%.In connection with the investment, Enersense and P2X have agreed on a partnership arrangement in which, if certain preconditions related to pricing, quality level and certain other aspects are met, Enersense will have the status of the preferred supplier in the work to be carried out during the construction phase of Finland’s first green hydrogen production plant, which P2X will build in Harjavalta, as well as in maintenance and operation after the plant has been completed.The value of the cooperation is estimated at around EUR 7–8 million, which will mainly be spread over years 2022–2024, and will continue in terms of maintenance and operation.If the preconditions mentioned above are met, the preferred supplier status will also concern the other future projects of P2X, for which an agreement on partnership has been signed for three years.The parties will negotiate the terms and implementation of the cooperation in more detail during the spring of 2022.

The implementation of the investment and cooperation arrangement is conditional on significant support from the Ministry of Economic Affairs and Employment to P2X for the construction of the Harjavalta plant, as well as on certain other standard preconditions. In its application to the Ministry of Economic Affairs and Employment, P2X has applied in February 2021 for support of EUR 25 million.The closing of the investment agreement is expected take place by the end of January 2022.

Jussi Holopainen, CEO, Enersense International Plc: 

“Enersense’s holding in P2X will increase Enersense’s role in the value chain for zero-emission energy solutions.We strongly believe in P2X’s experienced management as well as the company’s concrete business plan for advancing the hydrogen economy. Hydrogen will become an important energy source in sectors not suitable for electrification. The European Union’s hydrogen strategy is related to opportunities to support the decarbonisation of industry, transport, electricity generation and buildings. The strategy aims to accelerate the development of clean hydrogen in Europe. Hydrogen is playing a significant role in creating a climate-neutral energy system by 2050: it can be used to replace fossil fuels and enable the longer-term storage of clean energy.”

P2X Solutions Oy in brief

P2X is a Finnish company established in October 2020. Its business operations are based on the production of green hydrogen – that is, hydrogen produced using renewable energy – and power-to-X technologies and processes that enable renewable electricity to be stored as synthetic fuels or converted into other compounds. 

P2X is planning to build Finland’s first green hydrogen production plant in Harjavalta.The plant will produce green hydrogen from renewable electricity for industrial and other needs.Its capacity will be 20 MW, and it will also produce oxygen and thermal energy as side streams for industry.The goal is to start construction in Harjavalta in the autumn of 2022, and commissioning is scheduled for the first half of 2024.

P2X is a company in the early stages of operation. Its first financial year will end on 31 December 2021, and no information about its turnover and balance sheet is available at this point. The business operations of P2X in 2021 are limited. According to P2X, its operations will grow significantly upon completion of the hydrogen production plant.

Terms and conditions of the investment in brief

The investment will be implemented through a directed share issue in which P2X issues new shares to Enersense and at least two other investors.Subject to the completion of the investment, the amount of Enersense’s investment will be EUR 13–18 million, and Enersense’s holding in P2X will be around 16.3–22.5% of the share capital of P2X.The exact amount of Enersense’s investment will be determined before its completion based on the number of other investors participating in the investment round, but will in any case be at least EUR 13 million (corresponding to a holding of around 16.3%) but no more than EUR 18 million (corresponding to a holding of around 22.5%).

The completion of the investment and cooperation arrangement is conditional on significant support from the Ministry of Economic Affairs and Employment to P2X for the construction of the Harjavalta plant, as well as on certain other standard preconditions. In its application to the Ministry of Economic Affairs and Employment, P2X has applied in February 2021 for support of EUR 25 million. In connection with the investment, the parties will enter into a standard shareholder agreement concerning P2X.

If the arrangement is executed, the investment will be paid in cash in three instalments by October 2022, and will be financed by means of Enersense’s cash assets. 

Related party transaction

The investment and cooperation arrangement will constitute a related party transaction for Enersense, as Herkko Plit, a member of Enersense’s Board of Directors, is one of the largest shareholders of P2X before the arrangement through his controlling company, 4HP Solutions Oy, and exercises joint control in P2X. Herkko Plit also serves as the CEO and a Board member of P2X. Enersense’s Board of Directors has estimated that the related party transaction is in line with the company’s interests and is subject to standard commercial terms. Herkko Plit has not been involved in processing the investment and cooperation arrangement or decision-making concerning the arrangement by Enersense’s Board of Directors. The related party transaction is supported by all Board members who are not in a related party relationship with P2X or the matter to be decided on.

The arrangement will, subject to its completion, have no impact on Enersense’s financial guidance for 2021.