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Apart From HVAC Biz Disposition, Parent Of Retail Supplier Exploring "Sale Of Other Assets"

November 29, 2017

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

ONEnergy Inc., the parent of retail supplier Sunwave Gas & Power Inc., said in reporting earnings yesterday that, in addition to the previously reported disposition of its Home Comfort (HVAC) business, the company is engaged in an evaluation of opportunities to deliver value to shareholders which, "includes exploring the sale of other assets of the Company."

Apart from Sunwave and Home Comfort, ONEnergy's business consists of offering energy efficiency products and services (under the brand ONEnergy).

As previously reported, ONEnergy recently announced the mutual termination of an arrangement agreement that essentially would have seen ONEnergy Inc., combined with OZZ Electric Inc., a firm providing various energy services and projects for C&I customers, and OZZ Clean Energy Inc., a firm providing solar, microgrid, and storage solutions (see details here)

At the time of such termination, ONEnergy said on November 13 that it, "remains committed to delivering new value to shareholders of the Company and is currently evaluating opportunities both inside and outside of the energy management space and will update shareholders when the Company has completed this evaluation."

While ONEnergy reiterated such commitment in reporting earnings yesterday, it has newly disclosed that such evaluation of opportunities includes the potential sale of assets other than its HVAC business (for which disposition was previously announced)

Specifically, in a November 28 news release, ONEnergy said, "ONEnergy remains committed to delivering new value to shareholders of the Company and is currently evaluating opportunities both inside and outside of the energy management space and will update shareholders when the Company has completed this evaluation. In addition to the previously announced disposition of its Home Comfort business, this evaluation includes exploring the sale of other assets of the Company."

ONEnergy, in an MD&A, also reported, "there is material uncertainty related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern," which is a disclosure that had also been made in recent quarterly MD&As.

In the MD&A filed on Nov. 28 (all $ in this quote are expressed as thousands (000s) of Canadian $) ONEnergy said, "As at September 30, 2017, the Company has an accumulated deficit of $39,533 (December 31, 2016 - $33,217), including a net loss of $1,611 and $6,316 for the three months and nine months ended September 30, 2017, respectively (net income of $9 and $5,127 for the three months and nine months ended September 30, 2016, respectively). To address its financing needs, the Company will work towards concluding the previously announced sale of its Home Comfort business as well as securing additional debt and/or equity financing. Whether and when the Company can achieve the above is uncertain. As a result, there is material uncertainty related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern."

Also in the Nov. 28 MD&A, ONEnergy disclosed that, "As at September 30, 2017, Gas & Power was non-compliant with two covenants in the Shell credit agreements." [Gas & Power is the retail supply business]

In contrast, in a prior Aug. 29 MD&A, ONEnergy disclosed that, "As at June 30, 2017, Gas & Power was non-compliant with a single covenant in the Shell credit agreements."

For the three-month period ended September 30, 2017, ONEnergy revenues from continuing operations increased by 8.9 percent to $12 million versus $11 million during the corresponding period in 2016. ONEnergy's adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) loss, and loss from continuing operations is $2.1 million and $1.5 million, respectively, compared to Adjusted EBITDA loss of $0.8 million and net loss from continuing operations of $0.3 million during Q3 2016 (all $ in story Canadian).

ONEnergy's Gas & Power (retail supplier) unit reported revenue for the three and nine months ended September 30, 2017 of $11,844,000 and $32,900,000, respectively, compared to $10,303,000 and $24,943,000 for the same period in 2016. The increase is a result of higher average number of electricity customers from net new customer additions, particularly in the Pennsylvania market. Revenue is derived from sales of natural gas and electricity to customers in Ontario and sales of electricity in Connecticut, Pennsylvania, Massachusetts and Ohio. U.S. retail supply operations contributed $11,198,000 and $30,343,000 of revenues for the three and nine months ended September 30, 2017, respectively, compared to $9,623,000 and $22,727,000 for the same period in 2016.

Cash and restricted cash as at September 30, 2017 totaled $5.6 million.

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