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Crius Energy To Purchase Assets from Verengo, "Fortify" Crius' Solar Energy Business

September 23, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Crius Energy Trust today announced the formation of a newly-created special purpose vehicle, Crius Solar Fulfillment, LLC ("Newco"), to serve as the debtor-in-possession ("DIP") lender and bidder for the purchase of certain residential solar installation assets (the "Solar Installation Assets") from Verengo, Inc. ("Verengo"), in a bankruptcy proceeding under chapter 11 of the United States Bankruptcy Code.

Newco will be majority owned by Crius Energy Corporation (64.5%), an affiliate of Crius Energy, LLC ("Crius Energy"), and will have three non-controlling members consisting of two prominent clean technology investment firms and a leader in the residential solar finance industry.

In addition to the involvement of Newco as pre-petition and DIP lender (for an amount of up to US$4.8 million, which is to be used for the bankruptcy proceeding under chapter 11 of the United States Bankruptcy Code and payments to certain of Verengo's creditors), Newco has entered into an asset purchase agreement dated September 23, 2016 (the "Purchase Agreement") with Verengo to acquire the Solar Installation Assets including Verengo's residential solar installation platform, certain contracts, and human capital. The Purchase Agreement sets forth the bid of Newco for the Solar Installation Assets in the bankruptcy proceedings, and reflects a purchase price of US$11.9 million, consisting of US$2.25 million cash contribution from Crius Energy as well as the contribution of US$2.55 million cash and other interests from the non-controlling members of Newco. The closing of the transaction is subject to, among other things, the satisfaction of the conditions precedent in the Purchase Agreement, including all approvals required under Verengo's bankruptcy proceeding.

"With a track-record of more than 20,000 solar installations dating back to 2008, the addition of the Verengo platform and team promises to fortify Crius Energy's position as a challenger in the fast growing U.S. solar market," said Michael Fallquist, Chief Executive Officer of the Trust. "This transaction augments our recent acquisition of the SunEdison platform as it provides vertically integrated capability in California. The acquisition is expected to contribute positive EBITDA in fiscal year 2017 as well as valuable strategic relationships with our partners in the transaction."

By the end of fiscal year 2017, Newco is expected to become a wholly-owned subsidiary of the Trust through exchange transactions with the three non-controlling members of Newco, pursuant to which such non-controlling members will receive trust units of the Trust ("Trust Units") in exchange for their membership interest in Newco. The number of Trust Units to be issued to such non-controlling members of Newco in exchange for their membership interest in Newco will depend, among other things on (i) the achievement of certain operational performance targets, and (ii) a formula based primarily on the annualized revenue of Newco for the six-month period ending September 30, 2017. While the number of Trust Units to be issued to such non-controlling members will depend on the actual performance of Newco and the Solar Installation Assets, management believe that such targets will be accretive to unitholders of the Trust.

In addition, on September 19, 2016, Crius Energy successfully completed the previously announced acquisition of certain solar energy business assets from SunEdison Inc. ("SunEdison"), through its subsidiary Crius Solar, LLC. Crius Energy acquired SunEdison's proprietary residential solar lead-generation platform, customer lead databases, marketing materials and human capital, expanding Crius Energy's operational capabilities in the solar energy segment.

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