CBD Energy acquisition target, eco-Kinetics wins $20M tender

Diversified renewable energy company CBD Enery (ASX: CBD) has announced that its acquisition target eco-Kinetics has won a competitive $20 million tender to supply solar equipment in Shepparton in Victoria over the next 12 months.

The move coincides with CBD's proposed acquisition of the company, with eco-Kinetics to supply solar photovoltaic electricity generation systems.

CBD shares have moved up in recent months as the market re-values the company’s new direction and revenue potential.

Today’s announcement indicates there is plenty of scope for more increments in valuation.

The tender win for eco-Kinetics was awarded by Solar Valley Goes Solar, an initiative of Murchison Valley Goes Solar and the Shepparton Chamber of Commerce.

SVGS is a not for profit community group aiming to increase the uptake of sustainable energy technologies by making selected systems available as cheaply and simply as possible.

eco-Kinetics will supply equipment to SVGS under an SVGS bulk buy program which gives local residents the chance to buy solar systems more cheaply and implement their own renewable energy solution.

The solar photovoltaic systems will qualify for a subsidy under the Australian government’s solar credits scheme through the sale of renewable energy certificates.

SVGS has also arranged for Origin Energy to supply hot water systems to link with the solar photovoltaic electricity generation systems.

eco-Kinetics managing director Edwin Cywinski said the tender win was another important milestone for the growth of eco-Kinetics.

CBD managing director Gerry McGowan said the supply contract also showed the ability of the eco-Kinetics business to repeat its success and achieve ongoing sales.

Eco-Kinetics is forecasting to achieve revenue of $40 million for the year to June 2010 and the SVGS contract will be a contributor to revenue in 2010 and 2011.

The company has agreed to buy eco-Kinetics for approximately $13 million, comprising a cash payment of $5 million on completion with the remainder of the consideration in cash and shares, subject to an earn out over the next two and half years.

It has completed and signed a share purchase agreement with eco-Kinetics, with the agreement subject to raising an appropriate amount of capital to complete the transaction.

Mr McGowan said this was a fantastic acquisition for CBD.

"The eco-Kinetics executive team is estimating $40m of revenues in the 2010 year with estimated EBIT of approximately $10,000,000," Mr McGowan said.

"This latest tender win means they have secured around half of their revenue projections for the 2011 financial year.

"This, combined with other initiatives they have tendered on, gives CBD confidence they will repeat their performance in 2011.”

Eco-Kinetics is a sustainable and renewable energy company, providing retail and commercial customers with professional engineering solutions to make effective use of wind and solar power.

Headquartered in Stapylton, near the Queensland Gold Coast, eco-Kinetics has offices in NSW, Victoria, Northern Territory, New Zealand and Fiji and representations in several other locations in Australia, Asia and the South Pacific.

CBD Energy is a diversified renewable energy company, with projects in Australia, New Zealand and China.