American Electric Technologies, Inc. (AETI) and Stabilis Energy have created a new small-scale liquefied natural gas (LNG) production and distribution company.
Stabilis, a supplier of LNG to the industrial, midstream, and oilfield sectors in North America, has merged into AETI, a provider of power delivery solutions, after the two Texas-based companies reached a definitive share exchange agreement.
The transaction includes both Stabilis Energy (LNG production) and Prometheus Energy (LNG distribution), with Stabilis and its subsidiaries to become wholly-owned subsidiaries of AETI.
Upon completion of the transaction, the combined company will be renamed “Stabilis Energy, Inc.” and will apply to continue trading on the NASDAQ Stock Market under the symbol SLNG.
Stabilis President and CEO James Reddinger will serve as President and CEO of the combined Stabilis Energy, Inc; Casey Crenshaw, the controlling shareholder of Stabilis, will serve as Executive Chairman.
“We believe the combination of Stabilis and AETI will create a leading platform for growth and consolidation in the North American small-scale LNG industry,” said Reddinger.
“Stabilis plans to continue to invest in the assets and capabilities required to provide our customers with a low cost, reliable, and comprehensive LNG solution across North America.”
The existing AETI shareholders will own 11% of the combined company, while the former owners of Stabilis will own 89% of the combined company.
AETI is headquartered in Houston and has global sales, support and manufacturing operations in Rio de Janeiro, Macae and Belo Horizonte, Brazil.
“AETI is pleased to announce this combination with Stabilis,” said Peter Menikoff, Chairman and Chief Executive Officer of AETI.
“We believe the transaction will give the Company a substantial North American LNG business to complement its international operations. Additionally, we believe the transaction will benefit AETI by increasing the breadth of its operations to more comfortably support its fixed overhead expenses, de-leveraging its balance sheet, and facilitating access to capital.”
As well as being a leader in the small-scale production and distribution of LNG in North America, Stabilis also provides turnkey fuel solutions to help industrial users of diesel and other crude-based fuel products convert to LNG, resulting in reduced fuel costs and improved environmental footprint. It had had net revenue of $26.5m and Earnings before interest, taxes, depreciation, and amortization of $1.8m during the nine months ending 30th September, 2018.
”We believe that small-scale LNG has tremendous growth potential across multiple end markets in North America, and this transaction gives us the opportunity to grow Stabilis’ footprint aggressively in the near future,” said Crenshaw.
The combined company will continue to operate AETI’s existing Brazilian subsidiary and Chinese joint venture. Art Dauber, former Chairman and CEO of AETI, plans to join the combined company as President of International Operations and a member of the Board of Directors to lead the development of Stabilis LNG operations in South America and China.
”We believe that the transaction will give us the public equity currency we need to accelerate our growth plans through equity-funded acquisitions and cash-funded capital investments,” Steve Stump, Stabilis Vice President, told gasworld.