Statements to the New Zealand and Australian sharemarkets this week show that, at this stage, there is no change in the stance of key shareholders Infratil Ltd (NZX: IFT) and Mercury NZ Ltd (NZX & ASX: MCY) and takeover target Tilt Renewables Ltd (NZX & ASX: TLT).
The chairwoman of Tilt Renewables Fiona Oliver has told shareholders the $2.30 per share takeover offer from the Infratil and Mercury joint venture for all shares they don’t own closes next Monday.
She said that at the time of writing, acceptances of the offer total less than 1% of the shares in the company - excluding the option exercise over shares held by TECT Holdings Ltd which was entered into prior to the offer).
“It appears shareholders overwhelmingly agree with the independent directors that the offer is inadequate and does not represent fair value for your Tilt Renewables shares,” she said.
Oliver said there are three considerations raised by Infratil in recent communications that she would comment about:
The Grant Thornton report: Despite being called independent by Infratil it was commissioned, paid for and based on information provided by Infratil. Tilt independent directors do not agree with conclusions of that report. They consider the independent report was the one by Northington Partners that was part of Tilt’s Target Company Statement. That report determined a fair value range for the company of between $2.56 and $3.01 per share.
Dundonnell capital raising: Tilt gained a Victorian Renewable Energy Auction Scheme (VREAS) to secure a 15 year offtake by the Victorian State Government for around 37% of the output from the Dundonnell wind farm. Tilt proposed building the wind farm in early 2019. The independent adviser believes the VREAS announcement has an incremental value alone of about 22¢ per share. Shareholders approved the project at the recent Tilt Renewables AGM.
Share price after the offer: Infratil-Mercury raised the prospect after their offer closes that Tilt shares may trade at a price below the offer price. The share price immediately prior to the Offer was $2.13. She said: “We note that the VREAS announcement occurred after the date of the offer and the independent adviser regarded this as very positive. But no-one can say what the actual price may be when the offer closes or how the shares may trade beyond that.”
Infratil responded to this by affirming the takeover bid would proceed on the terms it had set out earlier.
It said the offer price was both fair and attractive compensation to shareholders for the value of existing operational assets and the future potential.
“There is significant increased political and regulatory pressure in the Australian renewable energy sector at this time, creating uncertainty over Tilt Renewables' outlook and value and the broader prospects for the renewable energy industry,” Infratil said.
The company said it is an experienced investor with strong insight into the renewable energy sector and “is not prepared to pay a significant additional premium for Tilt Renewables given the uncertainty and strong evidence of comparable market pricing for similar assets.”
Infratil pointed out Tilt has a significant near-term funding requirement to raise about $A280 M of new equity to fund the Dundonnell wind farm development.
“The view of Infratil is that Tilt Renewables shareholders should not expect their shares to trade on the NZX in the valuation range asserted by their independent directors in the near future.
“Should the offer not reach the 90% compulsory acquisition threshold, Infratil’s view is that there is a significant risk that the Tilt Renewables share price will trade below the offer price,” Infatil added.