TIDMGKO
RNS Number : 7010C
Greenko Group plc
19 October 2015
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, WITHIN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF THAT JURISDICTION
FOR IMMEDIATE RELEASE
19 October 2015
Greenko Group plc
("Greenko" or the "Company")
Proposed Sale of Greenko Mauritius
and
Notice of Extraordinary General Meeting
On 14 August 2015, the Board of Greenko announced that it had
signed non-binding heads of terms with GIC for the sale of all of
the Company's shares in Greenko Mauritius. The Company is pleased
to confirm that it has today entered into a sale and purchase
agreement with Greenko Energy Holdings ("GEH", a newly formed
subsidiary of Cambourne (an affiliate of GIC)) for the disposal of
all of the Company's shares in Greenko Mauritius and all other
assets held by the Company at Completion.
The Sale and Purchase Agreement provides that GEH will acquire
the Company's interest in Greenko Mauritius and all other assets
held by the Company at Completion, subject to certain conditions,
for an aggregate cash consideration of approximately GBP162.8
million, payable at Completion. Following Completion and based on
certain assumptions, the Company is expected to have cash resources
to make capital returns to Shareholders of up to approximately 100
pence per Ordinary Share in aggregate, with a planned initial
capital return of 98 pence per Ordinary Share.
Completion of the Disposal will require, inter alia, the
approval of Shareholders in accordance with the requirements of the
AIM Rules. The level of Shareholder approval required is more than
50 per cent. of Shareholders voting in respect of the Disposal.
In addition, set out below is the investing policy in accordance
with Rule 15 of the AIM Rules that will be adopted by the Company
upon completion of the Disposal in respect of which the Company
will also need to seek Shareholder approval. The level of
Shareholder approval required is more than 50 per cent. of
Shareholders voting in respect of the Investing Policy.
Anil Kumar Chalamalasetty, the Chief Executive Officer &
Managing Director of the Company, and Mahesh Kolli, the President
& Joint Managing Director of the Company, have agreed to enter
into new service agreements with the newly formed GEH Group
pursuant to which they will continue to participate in the
management of the GEH Group in accordance with the terms of the new
service agreements and under the guidance and supervision of the
GEH and Greenko Energies Private Limited ("GEPL") boards. Greenko
Ventures Limited ("GVL"), which is associated with ACMK (which is a
current shareholder of the Company and in which Anil Kumar
Chalamalasetty and Mahesh Kolli have a controlling interest), will
also invest in GEH and execute a shareholders' agreement on
Completion. Accordingly, Anil Kumar Chalamalasetty and Mahesh Kolli
have not participated in any Board vote regarding the Disposal due
to the potential for a conflict of interest.
Terms used and not defined in this announcement bear the meaning
given to them in the Circular to be published today, which will
contain a Notice of Extraordinary General Meeting to be convened
for 12.00 noon on 9 November 2015 at Merchants House, 24 North
Quay, Douglas, Isle of Man IM1 4LE, at which the Resolutions will
be put to Shareholders for approval. If the Resolutions, as set out
in the Notice of Extraordinary General Meeting, are passed the
completion of the Disposal will be subject to the satisfaction of
certain other conditions which will be described in the Circular.
Whilst the timeframe for the satisfaction of the conditions is
difficult to estimate, it is currently expected that Completion
will occur in November 2015.
Keith Henry, Chairman of Greenko, commented:
"I am pleased to be able to present the proposed Disposal to
Shareholders for their approval. The Independent Directors believe
that the Disposal is in the best interests of Shareholders and
through the realisation of certain cash proceeds will facilitate a
return of capital."
Enquiries:
Greenko Group plc +44 (0) 20 7920 3150
Keith Henry/Mahesh Kolli/Anil Chalamalasetty
Arden Partners plc +44 (0)20 7614 5917
Jonathan Keeling/Steve Douglas/James
Felix
Investec Bank plc +44 (0)20 7597 4000
Jeremy Ellis/Nigel Robinson
Tavistock +44 (0)20 7920 3150
Matt Ridsdale/Mike Bartlett/Niall Walsh
Description of Greenko Mauritius
Greenko Mauritius is a Mauritius incorporated subsidiary of the
Company and serves as the holding company for the Company's trading
activities, which comprise the development, ownership and operation
of clean energy projects in India. Cambourne and GEEMF hold the
remaining issued shares in Greenko Mauritius and, with effect from
1 July 2015, such shares are capable of being exchanged for shares
in the Company. As at 1 July 2015, Cambourne and GEEMF were
entitled to exchange investments in Greenko Mauritius valued in
accordance with the contractual arrangements between the Company
and each of Cambourne and GEEMF at GBP143,015,562 and $106,024,000
respectively, for shares in the Company at the prevailing share
price.
As at 30 June 2015, the estimated unaudited consolidated gross
assets of Greenko Mauritius and its subsidiaries amounted to
approximately $1,518,552,181, and its estimated unaudited
consolidated loss for the six months ended 30 June 2015 was
$107,669,897 (including exceptional item).
Background to and reasons for the Disposal
Greenko is a mainstream participant in the growing Indian
renewable energy industry and a market leading owner and operator
of clean energy projects in India, operating a portfolio of wind,
run-of-river hydropower, natural gas and biomass assets. The Group
is focused on building new utility scale wind farms and hydropower
projects across India. The Group's goal is to reach 1,000 MW of
operational capacity by the end of 2015. Further growth is subject
to the continued availability of development funding.
Greenko was admitted to trading on the AIM market of the London
Stock Exchange in November 2007 and was successful in raising
equity capital on AIM until 2012, since which its focus has been to
raise growth capital at a subsidiary level. Whilst the Group has
broadly met its operational targets, the Directors believe that
this performance has not been reflected in the Company's share
price, which has been particularly weak since October 2014.
Investor sentiment towards the strength of the Indian economy,
including its currency, and its energy industry has been mixed in
recent years. More specifically, the Company's shares have been
largely illiquid and susceptible to sales by Shareholders, some of
which have been forced by Shareholders' individual circumstances.
The Company has previously raised development funding required to
continue its growth from Cambourne and GEEMF via investments in
Greenko Mauritius, which are currently exchangeable into shares in
the Company at the prevailing share price. These funding
arrangements provide certain minimum guaranteed protective returns
to the funders, which have not been met and have had the effect of
increasing significantly the number of shares in the Company to
which Cambourne and GEEMF would be entitled upon exchange.
Accordingly, at the current share price the exchange would be
substantially more dilutive to value for existing Shareholders than
was envisaged when these investments were originally made, and may
lead to further share price weakness and liabilities.
It is for these reasons that the Board entered into discussions
with GIC to find a solution at a subsidiary level which supports
all stakeholders and the business, which ultimately led to GIC
making a non-binding offer to purchase the Company's entire
shareholding in Greenko Mauritius. The Board has, therefore, agreed
terms with GEH to sell the Company's entire shareholding in Greenko
Mauritius and all the other assets held by the Company at
Completion to GEH, subject to certain conditions and for an
aggregate cash consideration of approximately GBP162.8 million. The
Independent Directors have concluded that the Disposal is in the
best interests of Shareholders as a whole. Following Completion, on
the basis of certain assumptions, the Company is expected to have
the cash resources to make capital returns to Shareholders of up to
approximately 100 pence per Ordinary Share in aggregate, with a
planned initial capital return of 98 pence per Ordinary Share.
The Independent Directors consider that the Disposal has the
following principal benefits:
-- the expected cash resources of the Company, following
Completion and on the basis of certain assumptions, of up to
approximately GBP159 million, equates to an approximate value per
Ordinary Share of 100 pence. This represents a 123.5 per cent.
premium to the Company's closing share price of 44.75 pence per
Ordinary Share as at 22 June 2015 (being the day before the Company
announced it was in discussions to find a solution at a subsidiary
level which supports all stakeholders and the business) and a 21.2
per cent. premium to the Company's closing share price of 82.5
pence per ordinary share as at 13 August 2015 (being the day before
the announcement of the non-binding heads of terms with GIC);
-- the price of the Ordinary Shares reduced substantially in the
nine months leading up to the 23 June 2015 announcement referred to
above as concerns over Shareholder dilution arising from the
Group's funding arrangements with Cambourne and GEEMF grew. There
is a risk that, in the event that the Disposal is not effected, the
share price will continue to be depressed and Shareholders will be
unable to sell their Ordinary Shares at a price equivalent to the
proposed capital returns resulting from the Disposal;
(MORE TO FOLLOW) Dow Jones Newswires
October 19, 2015 08:09 ET (12:09 GMT)
-- the Disposal provides the opportunity for Shareholders to
realise a near-term cash consideration, reducing the timeframe and
overall risk of receiving cash returns from the Company's asset
portfolio;
-- should the Disposal not proceed the Company would continue to
operate its existing portfolio of clean energy assets and complete
the construction and commissioning of its projects currently under
development for which it has already secured development funding;
however, in light of its current capital structure and low share
price, the Independent Directors consider that it would have
limited access to further equity capital for development funding
and that its potential for further growth would therefore be
constrained; and
-- in addition, were Cambourne and/or GEEMF to elect to exchange
their shares in Greenko Mauritius for shares in the Company at the
current prevailing share price, which they have been contractually
entitled to do since 1 July 2015, this would be highly dilutive for
existing Shareholders.
The Independent Directors are mindful that the Disposal would
not allow Shareholders to participate in Greenko's potential future
growth beyond 1,000 MW of operational capacity for which funding is
not currently available. Taking into account the above
considerations, they believe that on balance the Disposal is in the
best interests of Shareholders and through the realisation of
certain cash proceeds will facilitate a return of capital that is
attractive in the context of the recent depressed share price and
the potential dilutive effect of a share exchange by Cambourne
and/or GEEMF.
Current Trading
On 30 September 2015, the Company announced its interim results
for the six months ended 30 June 2015, which contained an update on
current trading. A copy of the announcement is available on the
Company's website at www.greenkogroup.com.
Proposals for the future of the Company and return of
capital
The Company is seeking advice on the most appropriate method to
return the net cash resources of the Company resulting from the
Disposal to Shareholders in a tax efficient manner. It is currently
expected that the planned initial capital return to Shareholders of
98 pence per Ordinary Share will be within a period of three months
from Completion. Further details will be provided to Shareholders
in due course.
On the basis of certain assumptions which will be described in
the Circular, the Company is expected to have sufficient cash
resources to make a distribution to Shareholders of up to
approximately GBP159 million in aggregate, equivalent to up to
approximately 100 pence per Ordinary Share on a Fully Diluted
Basis, with a planned initial capital return of 98 pence per
Ordinary Share.
The ability of the Company to make the estimated aggregate level
of distribution and the timing of such return is not currently
known with certainty.
Investing policy following the Disposal
If the Disposal is approved by Shareholders and the Company
completes the disposal of Greenko Mauritius, the Company's only
asset will be the cash resources resulting from the Disposal and
the Company will be treated for the purposes of the AIM Rules as an
investing company (as defined by the AIM Rules) and will be
required on Completion to adopt an investing policy. Accordingly, a
Resolution will be proposed at the Extraordinary General Meeting
seeking Shareholder approval for the adoption of the following
Investing Policy:
Investing Policy
"The Company's Investing Policy is to return capital to
Shareholders following completion of the sale of Greenko Mauritius.
The initial capital return, amounting to almost all of the expected
net proceeds from the sale of Greenko Mauritius, is expected to be
effected by way of a Shareholder distribution which will be subject
to the formal approval by Shareholders of the Company at a future
extraordinary general meeting. The notice for the future
extraordinary general meeting will be sent to Shareholders as soon
as practically possible following Completion. Thereafter, the
Company will conduct its affairs to comply with post Completion
obligations relating to the Disposal and at the end of such period
any residual funds will be returned to Shareholders by way of a
members' voluntary winding up or other restructuring, subject to
approval by Shareholders."
In accordance with paragraph 5.6 of the AIM Note for Investing
Companies, which forms part of the AIM Rules, where a company
quoted on AIM disposes of all, or substantially all, of its assets,
it has a period of 12 months from the date of the disposal to
implement its investing policy. If this is not fulfilled, the
company's shares will be suspended from trading on AIM.
Accordingly, if Greenko has not implemented the Investing Policy
within 12 months of Completion, the Ordinary Shares will be
suspended from trading on AIM.
Related party transactions
Cambourne currently holds approximately 17.38 per cent. of the
voting rights of Greenko Mauritius and is therefore a substantial
shareholder of the Company as defined in the AIM Rules, and as GEH
is an associate of Cambourne, the Disposal is classified as a
related party transaction pursuant to AIM Rule 13. In addition, on
completion of the Disposal, among other things, the shareholders'
agreement and other contractual arrangements between the Company
and/or Greenko Mauritius and Cambourne relating to its investment
in Greenko Mauritius and for the exchange of its shareholding in
Greenko Mauritius for shares in the Company are to be terminated.
These arrangements are related party transactions pursuant to AIM
Rule 13. Accordingly, the Independent Directors confirm, having
consulted with Arden, the Company's Nominated Adviser, that the
proposed terms of the Disposal, and the proposed terms of the
termination arrangements with Cambourne, are fair and reasonable
insofar as Shareholders are concerned.
Anil Kumar Chalamalasetty, the Chief Executive Officer &
Managing Director of the Company, and Mahesh Kolli, the President
& Joint Managing Director of the Company, have agreed to enter
into new service agreements with the newly formed GEH Group
pursuant to which they will continue to participate in the
management of the GEH Group in accordance with the terms of their
new service agreements respectively, and under the guidance and
supervision of the GEH and GEPL boards. GVL, which is associated
with ACMK (a current shareholder of the Company in which Anil Kumar
Chalamalasetty and Mahesh Kolli have a controlling interest), will
also invest in GEH and execute a shareholders' agreement on
Completion. Accordingly, Anil Kumar Chalamalasetty and Mahesh Kolli
have not participated in any Board vote regarding the Disposal due
to the potential for a conflict of interest.
GVL is expected to invest a sum equal to the proceeds received
by ACMK on completion of the Disposal in subscribing for new shares
in GEH and on Completion, GVL's holding in GEH shall be
approximately 12 per cent. plus approximately an additional 4 per
cent. in the form of non-voting performance shares. In addition,
GVL has an option which GVL needs to exercise within a period of
three months from Completion to purchase additional ordinary shares
in GEH from Cambourne at a price per share to be determined, but
which is not less than the price per share paid by GEH for the
Greenko Mauritius shares plus associated interest and transaction
costs, to take its total potential holding in GEH up to
approximately 38 per cent.
Anil Kumar Chalamalasetty, Mahesh Kolli and ACMK are providing
certain warranties to GEH and committing to certain undertakings in
relation to the Disposal. Further details of the arrangements
between GVL, Anil Kumar Chalamalasetty and Mahesh Kolli and GEH
will be included in the Circular.
ACMK currently holds options to acquire 3,100,000 Ordinary
Shares at an exercise price of EUR0.005 per Ordinary Share as
announced in September 2014. The Remuneration Committee has
resolved, conditionally on the Disposal taking effect on the terms
envisaged, that all of those options shall become exerciseable.
As a consequence of these arrangements and as Anil Kumar
Chalamalasetty and Mahesh Kolli are Directors of the Company, the
Disposal is classified as a related party transaction pursuant to
AIM Rule 13. Accordingly, the Independent Directors confirm, having
consulted with Arden, the Company's Nominated Adviser, that the
proposed terms of the Disposal are fair and reasonable insofar as
Shareholders are concerned.
GEEMF currently holds approximately 14.09 per cent. of the
voting rights of Greenko Mauritius and is therefore also a
substantial shareholder (as defined in the AIM Rules); GE is also a
substantial shareholder (as defined in the AIM Rules) by virtue of
its current holdings of the entire issued share capital of each of
Wind Power Projects (Mauritius) Limited and Wind Power Generations
(Mauritius) Limited which in turn hold approximately 24.1 per cent.
of the issued shares of Greenko Wind Projects Private Limited. On
completion of the Disposal, among other things, the shareholders'
agreement and other contractual arrangements between the Company
and/or Greenko Mauritius and GEEMF relating to its investment in
Greenko Mauritius and for the exchange of its shareholding in
Greenko Mauritius for shares in the Company are to be terminated;
the contractual arrangements between the Company and GE in respect
of the sale of GE's shares in Wind Power Project (Mauritius)
Limited and Wind Power Generations (Mauritius) Limited to the
Company are to be novated to Greenko Mauritius. These arrangements
are related party transactions pursuant to AIM Rule 13.
Accordingly, the Independent Directors further confirm, having
consulted with Arden, the Company's Nominated Adviser, that the
proposed terms of the termination and/or novation arrangements with
each of GEEMF and GE are fair and reasonable insofar as
Shareholders are concerned.
Recommendation
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October 19, 2015 08:09 ET (12:09 GMT)
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