Jade Power Trust (“
Jade Power” or the
“
Trust”) (TSXV: JPWR.UN) is pleased to announce
that its administrator, Jade Power Administrator Inc., (the
“Administrator”) has, on behalf of the Trust,
entered into (together with certain subsidiaries of the Trust) a
binding share sale agreement (the “
Purchase
Agreement”) dated September 1, 2022 with Enery Power
Holding GmbH (“
Enery”), an Austrian-based
renewable energy company with operations throughout the Czech
Republic, Slovakia and Bulgaria, and an affiliate thereof (the
“
Purchaser”), to sell all of its renewable energy
operating assets (the “
Sale Transaction”) pursuant
to the terms and conditions set out in the Purchase Agreement. The
parties to the Purchase Agreement act at arm’s length.
Purchase Price and Unit
Distributions
The purchase price (the “Purchase
Price”) under the Purchase Agreement is approximately Euro
71.0 million (approximately CDN$93.7 million1) and is payable in
cash at the closing of the Sale Transaction (subject to customary
closing adjustments) of which Euro 4.0 million (approximately
CDN$5.3 million) (the “Indemnity Escrow Amount”)
of the Purchase Price is to be deposited into escrow to cover
certain potential claims for a period of (i) up to 180 days
following the closing of the Sale Transaction with respect to up to
Euro 1.0 million of the Indemnity Escrow Amount; and (ii) up to one
(1) year from the closing of the Sale Transaction with respect to
the remaining Euro 3.0 million of the Indemnity Escrow Amount.
It is the intention of the Trust to distribute
all of the net proceeds received from the Sale Transaction,
together with any existing working capital less certain necessary
holdbacks for tax and operating and maintenance expenses of the
Trust, to the holders (“Unitholders”) of trust
units in the capital of the Trust (“Units”) in two
or more special distributions (each, a “Special
Distribution”). Assuming the release to Jade Power of the
Indemnity Escrow Amount in full, the Special Distributions shall be
approximately CDN$75.6 million (or Euro 57.3 million), or
approximately CDN$3.40 per Unit. Each Special Distribution shall be
made to the Unitholders of record as of the closing date of the
Sale Transaction. The initial Special Distribution is estimated to
be approximately CDN$67.3 million (or Euro 51.0 million), or
CDN$3.03 per Unit, and is expected to be made within seven days
after the closing of the Sale Transaction. Additional Special
Distributions are anticipated to be made at the applicable time
that funds are released from the Indemnity Escrow Amount and
certain tax and regulatory time limitations have passed.
Attractive Offer for
Unitholders
Assuming the release to Jade Power of the
Indemnity Escrow Amount in full, the CDN$75.6 million expected
value of all Special Distributions represents a premium of
approximately 28.3% to the closing price of CDN$2.65 per Unit on
the TSX Venture Exchange (the “TSXV”) on August
31, 2022 and a premium of approximately 32.8% to the ten day
average closing trading price of CDN$2.56 for the Units on the TSXV
for the period ended on August 31, 2022. The fact that the Purchase
Price is payable in cash will allow Unitholders to quickly realize
value for their investment and provides certainty of value and
immediate liquidity.
Additional details relating to the Purchase
Price, anticipated value and timing of the Special Distributions
and the quantum of applicable transaction expenses and taxes to be
paid or withheld prior to the payment of the Special Distributions
will be set out in the management information circular of the Trust
(the “Circular”) to be mailed to Unitholders in
connection with the contemplated special meeting (the
“Meeting”) of Unitholders at which Unitholders
will be asked to consider and, if thought advisable, approve the
Sale Transaction and the delisting (“Delisting”)
of the Units from the TSXV following the completion of the Sale
Transaction.
Ravi Sood, Executive Chairman of Jade Power, and
James Colter Eadie, Chief Executive Officer, jointly commented, "We
believe that this Offer affirms Management's vision for value
creation and an excellent value for Unitholders. The Offer also
represents a substantial premium to the weighted average price of
the Trust's units over any timeframe over the past several
years.
Having started with no assets in 2014, the Trust
utilized a variety of creative financing strategies to acquire
hydro, solar and wind assets in the first three years of its
operation through seven acquisitions and three equity financings.
Today, with this announcement, the Trust has not only achieved a
gross consideration more than double the per MW acquisition cost of
its final acquisition in 2018; in 48 months, the Trust has gone
from a net debt position of more than CDN$96.5 million to, at the
time of this announcement, a positive cash position. The Trust has
built a solid operating team with proven expertise in emerging
market renewable development and operations, and it is profitable
and well-capitalized. We believe this transaction is providing
Unitholders with liquidity at a compelling valuation. The Trust's
Management and Board of Directors are very grateful for the support
of Unitholders throughout this journey."
On the occasion of this milestone, Richard
König, CEO and Lukas Nemec, COO of Enery commented: “While we are
already developing solar greenfield assets in Romania for three
years, this represents the initiation of our green electricity
production in the fast growing and dynamic Romanian renewable
energy through the acquisition of operational renewable capacity in
a diversified mix of wind, solar and hydro generation. As part of
the transaction we will sell the mix of diversified renewable
energy production via long-term power purchase agreements to key
industrial off-takers in Romania, who are securing their long-term
electricity needs at a substantial discount to current market
prices. We are thankful to our team and our partners for signing
this important milestone in a turbulent market environment and look
forward to continue to build and increase our presence in the
Romanian electricity market.“
Unitholder Approval and Recommendation
of the Board and Special Committee
The closing of the Sale Transaction is subject
to various conditions, including the approval of the Unitholders
pursuant to the terms of the trust indenture of the Trust dated
February 4, 2014, as amended and restated from time to time, the
approval of the TSXV and the approval of the Romanian Competition
Authority and Foreign Direct Investment Authority.
In connection with the consideration of the Sale
Transaction, the board of directors (the “Board”)
of the Administrator and a special committee (the “Special
Committee”) of independent directors of the Administrator
formed to consider the Sale Transaction on behalf of the Trust,
retained Haywood Securities Inc. (“Haywood”) to
act as financial advisor to the Special Committee and the Board and
to prepare and deliver to the Special Committee and the Board an
opinion as to the fairness, from a financial point of view, of the
consideration to be received by the Trust under the Sale
Transaction (the “Fairness Opinion”). The Fairness
Opinion provided that, as of the date of such opinion, based upon
and subject to the assumptions, limitations and qualifications set
out therein, the Purchase Price payable by the Purchaser is fair,
from a financial point of view, to the Trust.
The members of the Board, after consultation
with management and their legal and financial advisors, including
Haywood, and following receipt of a unanimous recommendation of the
Special Committee, for reasons to be more fully described in the
Circular to be mailed to Unitholders in connection with the Sale
Transaction and filed on www.sedar.com, have unanimously approved
the Sale Transaction and determined that the Sale Transaction is in
the best interests of the Trust and recommend that Unitholders vote
in favour of the Sale Transaction.
Pursuant to commercial agreements entered into
between the Purchaser and RG Renovatio Group Limited
(“Renovatio”), the largest Unitholder of the Trust
holding approximately 23.5% of the issued and outstanding Units,
Renovatio is expected to receive certain payments on closing of the
Sale Transaction and subsequent thereto, which agreements are
contingent upon completion of the Sale Transaction. Such agreements
and payments thereunder constitute a “related party transaction”
under Multilateral Instrument 61-101 – Protection of Minority
Security Holders in Special Transactions ("MI
61-101"). MI 61-101 provides that, in certain
circumstances, where a “related party” (as defined in MI 61-101) of
an issuer is entitled to receive a “collateral benefit” (as defined
in MI 61-101) in connection with a transaction such as the Sale
Transaction, such transaction may be considered a “related party
transaction”. The Sale Transaction is exempt from the formal
valuation requirements of MI 61-101 given that the Trust’s Units
are listed on the TSXV.
The Sale Transaction is subject to the approval
of at least 66.6% of the votes cast by Unitholders at the Meeting.
Pursuant to MI 61-101 and the rules of the TSXV, the Sale
Transaction will also require approval by a majority of votes cast
by holders of the Units after excluding the Units owned or
controlled by Renovatio. Jade Power has also determined that Mr.
Ravi Sood, Executive Chairman of Jade Power, will also be excluded
for the purposes of determining if minority approval of the Sale
Transaction is obtained as he is entitled to receive a “collateral
benefit” pursuant to the provisions of MI 61-101 in connection with
the Sale Transaction as a result of his existing change of control
payments under his Chairman Agreement and as Mr. Sood owns or
exercises control and direction over more than 1% on the Units.
The Delisting is also subject to the approval of
at least a majority of the votes cast by Unitholders at the
Meeting. Such approvals will be sought at the Meeting which is
currently expected to be held in October 2022. As stated, full
details of the Sale Transaction, the Delisting and other matters
will be set out in the Circular prepared for the Meeting.
Each of the directors and officers of the
Administrator have entered into voting support agreements and
agreed to vote their Units in favour of the Sale Transaction and
Delisting, which Units, in aggregate, represent approximately 3.04%
of the issued and outstanding Units.
The Purchase Agreement
Under the terms of the Purchase Agreement, the
Purchaser has agreed to acquire all of the operating assets of the
Trust through the acquisition from the Trust’s wholly-owned Dutch
subsidiaries, being Transeastern Power Cooperatief U.A. and
Transeastern Power B.V.. and its wholly-owned Romanian
subsidiaries, Transeastern Hidroelectrica Del Ucea SPV I S.R.L. and
Transeastern Rott Energy SPV III S.R.L. (collectively, the
“Holding Subsidiaries”), of all of the equity
interests in the Trust’s operating Romanian subsidiaries, namely
Power LIVE One S.A., Rott Energy S.A., Zagra Hidro S.A., Corabia
Solar S.A., Holmron Renewable Energy S.A. and East Wind Farm S.R.L
(collectively, the “Romanian Operating
Subsidiaries”) and to repay the shareholder loans owing to
the Trust and/or the Holding Subsidiaries by the Romanian Operating
Subsidiaries.
The closing of the Sale Transaction is subject
to a number of customary conditions, including with respect to the
truth and accuracy of the parties’ representations and warranties
and material compliance with their respective covenants. The
Purchase Agreement includes customary provisions relating to
non-solicitation, subject to customary “fiduciary out” provisions
including the Trust’s right to consider and accept unsolicited
superior proposals in certain circumstances, subject to a right to
match in favor of the Purchaser or the payment to the Purchaser of
a ‘break fee’ of Euro 3.5 million (CDN$4,620,000). A termination
fee of Euro 3.5 million (CDN$4,620,000) is payable by the Trust to
the Purchaser should the Sale Transaction not close in the event
that the Trust fails to receive Unitholder approval for the Sale
Transaction, while a separate termination fee of Euro 1.0 million
(CDN$1,320,000) is payable by the Trust to the Purchaser should the
Sale Transaction not close in the event that the Trust fails to
obtain conditional approval of the TSXV for the Sale Transaction,
in each case before November 30, 2022, which date may be extended
to January 15, 2023 in certain circumstances (the “Long
Stop Date”). A termination fee of Euro 1.0 million
(CDN$1,320,000) is payable by the Purchaser to the Trust should the
Sale Transaction not close in the event that the Purchaser fails to
receive certain clearances from the applicable Romanian competition
authorities prior to the Long Stop Date.
As stated above, contemporaneous with or
immediately following the completion of the Sale Transaction, the
Trust intends to de-list the Units from trading on the TSXV.
Copies of the Purchase Agreement and the
Circular to be mailed to Unitholders in connection with the Sale
Transaction will be filed with Canadian securities regulators and
will be available at www.sedar.com. Unitholders are urged to read
the Circular and the other relevant materials when they become
available, as such materials will contain important information
regarding the Sale Transaction.
For further information, please
contact:
Ravi SoodChairman+1 647-987-7663rsood@jadepower.com |
J. Colter EadieChief Executive Officer+40 736-372-724
jceadie@jadepower.com |
Betty SoaresChief Financial Officer+1
416-803-6760bsoares@jadepower.com |
About Jade Power
The Trust, through its direct and indirect
subsidiaries in Canada, the Netherlands and Romania, has been
formed to acquire interests in renewable energy assets in Romania,
other countries in Europe and abroad that can provide stable cash
flow to the Trust and a suitable risk-adjusted return on
investment. The Trust intends to qualify as a “mutual fund trust”
under the Income Tax Act (Canada) (the “Tax Act”). The
Trust will not be a “SIFT trust” (as defined in the Tax Act),
provided that the Trust complies at all times with its investment
restriction which precludes the Trust from holding any
“non-portfolio property” (as defined in the Tax Act). All material
information about the Trust may be found under Jade Power's issuer
profile at www.sedar.com.
About Enery
Enery is a young, operations-led renewable
energy company founded by Richard König, Lukas Nemec and RP Global.
The company is leading the green energy transition in Central
Eastern Europe by focusing on the acquisition, development,
construction and operation of renewable power plants. Since 2021,
the Three Seas Initiative Investment Fund (“3SIIF”) is Enery’s
cornerstone investor and is supporting the expansion of Enery’s
renewable portfolio. Enery is currently producing almost 200 GWh of
clean electricity, supplying almost 60,000 households across the
region.
Advisors
Aird & Berlis LLP, as Canadian counsel, and
Wolf Theiss, as Romanian counsel, acted as legal counsel to the
Trust and the Administrator. Schoenherr Attorneys At Law acted as
legal counsel to Enery and the Purchaser and DLA Piper (Canada) LLP
acted as legal counsel to the Special Committee. Haywood served as
exclusive financial advisor to the Special Committee and the Board.
Unicredit Group served as exclusive M&A advisor to Enery and
the Purchaser.
Forward-Looking Statements
Statements in this press release contain
forward-looking information. Such forward-looking information may
be identified by words such as “anticipates”, “plans”, “proposes”,
“estimates”, “intends”, “expects”, “believes”, “may” and “will”.
The forward-looking statements included in this press release,
including statements regarding the Sale Transaction, the receipt of
necessary Unitholder and TSXV approvals and satisfaction of other
closing conditions, the anticipated timing of the special meeting
of Unitholders to approve the Sale Transaction, the release of the
Indemnity Escrow Amount and the ultimate quantum and timing of the
Special Distributions payable to Unitholders upon closing of the
Sale Transaction and the timing of the de-listing of the Units from
the TSXV.
In respect of the forward-looking statements and
information included in this press release, the Trust has provided
such in reliance on certain assumptions that it believes are
reasonable at this time, including assumptions as to the timing of
the mailing of the Circular relating to the special meeting of
Unitholders to consider the Sale Transaction, the timing of such
Unitholder meeting, the ability of the parties to the Purchase
Agreement to receive, in a timely manner and on satisfactory terms,
necessary approvals to complete the Sale Transaction, the ability
of such parties to satisfy, in a timely manner, the other
conditions to the closing of the Sale Transaction, the ability of
the Company to manage the risks (economic, operational, financial,
and other risks) associated with the COVID-19 pandemic and ongoing
Russia-Ukraine conflict. Accordingly, readers should not place
undue reliance on the forward-looking statements and information
contained in this news release.
Forward-looking statements necessarily involve
known and unknown risks and uncertainties, many of which are beyond
the Trust’s control. Such risks and uncertainties include but are
not limited to: the risk that the Sale Transaction may not be
completed on a timely basis, or at all; risks that the conditions
to the consummation of the Sale Transaction may not be satisfied;
the risk that the Sale Transaction may involve unexpected costs,
liabilities or delays; the risk that, prior to the completion of
the Sale Transaction, the Trust’s business may experience
significant disruptions, including loss of customers or employees,
due to transaction-related uncertainty or other factors; the
possible occurrence of an event, change or other circumstance that
could result in termination of the Sale Transaction; risks that the
Sale Transaction may have a negative impact on the market price and
liquidity of the Units; risks related to the diversion of
management’s attention from the Trust’s ongoing business
operations; risks relating to the failure to obtain necessary
Unitholder and TSXV approvals; risks related to the Company’s
strategy going forward; risks related to the COVID-19 pandemic and
ongoing Russia-Ukraine conflict; foreign exchange risk; risks
related to the potential loss of the Trust’s status as a “mutual
fund trust” following the Special Distribution[s];
and other risks inherent to completing a cross-border transaction
of this nature. Further, failure to obtain the requisite approvals
or the failure of the parties to otherwise satisfy the conditions
to or complete the Sale Transaction, may result in the Sale
Transaction not being completed on the proposed terms, or at all.
In addition, if the Sale Transaction is not completed, and the
Trust’s business continues in its current form, the announcement of
the Sale Transaction and the dedication of substantial resources of
the Trust to the completion of the Sale Transaction could have a
material adverse impact on the Trust’s unit price, its current
business relationships (including with future and prospective
employees, customers and partners) and on the current and future
operations, financial condition and prospects of the Trust. When
relying on forward-looking statements to make decisions, investors
and others should carefully consider the foregoing factors and
other uncertainties and potential events. Readers are cautioned
that the foregoing list of factors is not exhaustive.
Details of additional risk factors relating to
the Trust and its business, generally, are discussed under the
heading “Business Risks and Uncertainties” in the Trust's annual
Management's Discussion & Analysis for the year ended December
31, 2021, a copy of which is available on Jade Power's SEDAR
profile at www.sedar.com. These statements speak only as of
the date of this press release. Except as otherwise required by
applicable securities statutes or regulation, Jade Power expressly
disclaims any intent or obligation to update publicly
forward-looking information, whether as a result of new
information, future events or otherwise.
Neither the TSXV nor its regulation
services provider (as that term is defined in the policies of the
TSXV) accepts responsibility for the adequacy or accuracy of this
release.
1 The Euro / CDN$ exchange rate based used throughout this press
release is 1:1.32 and is based on the Bank of Canada exchange rate
as at August 31, 2022.
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