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Highlights
- D9 enters a binding agreement to divest its interests in the EMIC-1 Project for $42 million, with completion expected by March 2025.
- The transaction releases the Group from $10 million in additional construction commitments and addresses ongoing impacts from regional conflicts.
- Proceeds from the sale will help reduce D9's £53 million Revolving Credit Facility, with further sales initiatives underway.
D9 (LSE:DGI9) has announced a significant step in its strategic portfolio reshaping with the divestment of its interests in the EMIC-1 Project. The binding agreement, valued at $42 million after transaction costs, marks a decisive move in the company’s ongoing efforts to streamline its operations and strengthen its balance sheet. The completion of the deal is expected by March 2025.
Divestment Details
The divestment agreement reflects a 15% discount (approximately 0.7p per share) to the latest valuation of the Project, which was $49.6 million as of June 30, 2024. The EMIC-1 Project has faced significant delays due to ongoing regional conflicts in the Red Sea area, which have indefinitely postponed its final construction completion. The sale also removes the Group’s obligation to $10 million in additional construction commitments related to the project.
Transaction costs include substantial fees connected to the upcoming sale of the Company’s subsea cable assets, AquaComms, which was committed at the start of the sales process in early 2024. These fees will be due upon completion of the AquaComms sale.
Debt Reduction and Ongoing Initiatives
The proceeds from the EMIC-1 divestment will be used to further deleverage D9’s balance sheet, particularly by reducing the £53 million Revolving Credit Facility (RCF). The company is also in discussions with its RCF lenders regarding extending the remaining balance of the RCF beyond its current maturity date of March 31, 2025. Additional sale initiatives are progressing in parallel, with the expectation that the remaining balance of the RCF will be repaid through these efforts.
AquaComms Sale and Broader Portfolio Strategy
D9 is in advanced talks regarding the sale of its remaining subsea cable business, AquaComms, and expects to report on developments in due course. A valuation process for the company’s broader investment portfolio for the year ending December 31, 2024, is currently underway.
InfraRed and the Board of D9 are also preparing for further engagement with shareholders, including a roadshow scheduled for early 2025 to discuss progress and future strategies.
