TIDMLEAF
RNS Number : 1994U
Leaf Clean Energy Company
27 March 2019
27 March 2019
Leaf Clean Energy Company
Results for the six months ended 31 December 2018
The board of Leaf Clean Energy Company ("Leaf") announces the
Leaf Group's results for the six months ended 31 December 2018.
For further information, please contact:
Mark Lerdal +1 (415) 264 5096
Leaf Clean Energy Company
Nicholas Wells +44 (0) 207 397 8920
Cenkos Securities plc
Chairman's statement
Dear Shareholder:
At 31 December 2018 Leaf's Net Asset Value ("NAV") was $16.7
million (30th June 2018: $19.3 million). Accordingly, at 31
December 2018 NAV per share was 31.67 cents (30th June 2018: 36.80
cents). The $2.7 million reduction in NAV resulted primarily from
costs of $1.7 million, and a $1.0 million write down on revaluation
of the investments. At the end of the period our assets comprised:
cash balances of $2.3 million, a receivable of $14.2 million in
respect of the Invenergy put/call redemption (being the balance of
the redemption price ordered by the Court as detailed below) and
investment balances of $1.0 million. As previously announced, Leaf
returned $25.7 million to its shareholders via a compulsory partial
share redemption which took place in July 2018.
Invenergy
As previously reported, on April 19, 2018, the Delaware Court of
Chancery (the "Court") issued a post-trial opinion with respect to
certain claims asserted in Leaf Invenergy Company, LLC v. Invenergy
Wind LLC, C.A. No. 1830-VCL (the "Invenergy Lawsuit"). The Court
previously held Invenergy Renewables LLC (formerly known as
Invenergy Wind LLC) ("Invenergy") had breached the parties' Third
Amended and Restated Limited Liability Company Agreement
("Operating Agreement") by engaging in a de ned "Material Partial
Sale" without either obtaining Leaf's consent or paying Leaf a
contractually de ned return on its investment. In its post-trial
opinion, the Court held that Leaf is only entitled to nominal
damages of $1 as a result of Invenergy's breach of the Operating
Agreement. In addition, the Court rejected Invenergy's counterclaim
seeking a declaration that Leaf had breached certain provisions
governing Leaf's ability to put its shares, and Invenergy's ability
to call those shares, and ordered the parties to complete the
put/call redemption process in accordance with the Operating
Agreement.
On June 14, 2018, the Court entered its nal order and judgment
in the Invenergy Lawsuit, awarding Leaf nominal damages of $1 as a
result of Invenergy's breach of the Operating Agreement. The
Court's nal order also entered judgment in Leaf's favor on
Invenergy's counterclaim seeking a declaration that Leaf had
breached certain provisions governing Leaf's ability to put its
shares, and Invenergy's ability to call those shares, thereby
establishing the redemption price to be paid to Leaf in connection
with that put/call process at $50.7 million. The final order
provided that the parties would complete the put/call process and
that Leaf would receive $36.4 million upon filing a notice of
appeal to the Delaware Supreme Court. The final order further
required Invenergy to place $15.3 million, representing the
disputed amount of $14.2 million plus one year of statutory
interest, in a court-controlled account pending resolution of
Invenergy's notice of cross-appeal related to its counterclaim.
Also on June 14, 2018, following entry of the Court's nal order
and judgment, Leaf led its notice of appeal to the Delaware Supreme
Court. Invenergy led its notice of cross-appeal related to its
counterclaim on June 25, 2018. Pursuant to the final order,
Invenergy paid Leaf $36.4 million on June 20, 2018. If Leaf is
successful on Invenergy's cross-appeal related to its counterclaim,
Invenergy will be required to pay Leaf the remaining $14.2 million
plus statutory interest through the conclusion of the appeal. Leaf
continues to believe it is entitled to damages of $122.2 million
plus pre-judgment interest less $36.4 million already received.
The Delaware Supreme Court heard oral argument in Leaf's appeal
of the damages awarded to it in the Invenergy lawsuit on 13
February 2019. Leaf anticipates that the Delaware Supreme Court
will issue its opinion within 90 days of the date of the oral
argument, with any remaining amounts due to Leaf likely to be known
and paid in the first half of 2019, net of any withholdings
required for tax purposes. We are of the view that any tax
withholdings from the put/call redemption will be recoverable.
Investments
Vital Renewable Energy Company ("VREC")
Leaf has an investment in VREC, the owner of a sugar-cane-based
facility in Brazil which produces ethanol and refined sugar. The
performance of this investment has been stable over the last 12
months despite the ongoing macroeconomic challenges in Brazil.
Notwithstanding the operational performance of this asset, the
current market conditions remain challenging and are not conducive
to facilitate a realization of this investment in the short to
medium term.
Energía Escalona ("Escalona")
Leaf has an investment in Escalona, a hydroelectric project
development company based in Mexico City, which has secured the
requisite permit to participate in the Mexican Wholesale
Electricity Market (MEM). The new Mexican Administration has
initiated a review of the energy policy and regulation in Mexico
and the impacts of such a review have yet to be fully understood.
While Leaf continues to explore its options for this asset, the
prevailing uncertainty in the marketplace might impede an
expeditious realization of this asset.
Conclusion
The outcome of the Invenergy legal case at the trial level has
been disappointing. We continue to believe the language of the
contract at issue there (as well as the parties' intent that Leaf
would receive its defined return) was clear and fully evidenced.
The outcome of the legal appeals process is uncertain, and costs
will be incurred for the appeal and to keep Leaf operating. The
Board has made significant cost reductions for 2019 and will need
to consider how best to operate Leaf to realize value in VREC and
any receivables that remain following the finalization of the
Invenergy legal process.
Mark Lerdal
Chairman
27 March 2019
Management report
During the six months ended 31 December 2018, Leaf's management
continued its work implementing Leaf's orderly realisation strategy
(see Strategy section below). These activities consisted of working
with Leaf's legal counsel in pursuing the breach of contract claim
filed by Leaf against its investee, Invenergy, while also
monitoring Leaf's remaining investments with a view towards future
realisation events for these holdings.
Following the October 2017 sale of Lehigh Technologies, Inc. to
Michelin, and the June 2018 redemption by Invenergy of Leaf's
ownership stake in Invenergy pursuant to the Court's order, Leaf's
portfolio consists of two remaining investments: VREC and Escalona.
Leaf is a minority holder in VREC and a majority holder in
Escalona.
While Leaf no longer held Invenergy as an investment as at 30
June 2018, most of the value for Leaf's shareholders still hinges
on Invenergy-related future events, namely the resolution of Leaf's
appeal from the award of only nominal damages by the Court in
Leaf's breach of contract claim against Invenergy, and Invenergy's
cross-appeal of the Court's ruling against Invenergy on their
counterclaim regarding the put/call process. See below for more
information about these events that will likely result in Leaf
receiving an additional $14.2 million of put/call redemption
proceeds, or possibly as much as $85 million of additional damages,
plus any pre- and post-judgment interest where applicable.
Strategy
The Leaf's investment strategy is an orderly realisation and
return of capital to the shareholders, which will occur on an
asset-by-asset basis in timeframes appropriate for each asset. The
Leaf Board at its discretion will balance the goal of returning
capital expediently to investors with the goal of maximising the
realisation value of the investments.
Leaf's remaining holdings are in the equity of two unlisted
companies. Therefore, realisations of these investments require the
cooperation of the investee companies and of other investors as
well as Leaf. In addition, the individual circumstances and market
conditions surrounding each investment must be taken into account,
affecting the timescale before which a particular investment can be
realised. This means that some investments may be considered
appropriate for sale in the short term, while others may be held
for a longer period.
Leaf will not invest in any new portfolio companies but may make
additional investments in existing portfolio companies where
required to preserve or enhance the realisation value of these
investments.
Financial highlights
Below is a summary of financial highlights for Leaf during the
six-month period ended 31 December 2018:
Invenergy-related highlights
Please refer to Note 19 to the consolidated financial statements
for more background and information regarding the Invenergy lawsuit
and put/call process.
Background from prior periods:
-- On 18 July 2016 Leaf filed a motion for entry of an order and
final judgment, asking the Court to order Invenergy to pay damages
of $126.1 million, based on the calculation of the Target Multiple
per the terms of the Operating Agreement, less the $3.9 million
previously reported tax distribution from Invenergy, plus interest
on the net $122.2 million in damages at the Delaware statutory rate
of interest of 6%, compounded quarterly, from the date of the
breach.
-- On 12 August 2016, Invenergy filed an answering brief to
Leaf's motion, disputing that Leaf is entitled to the damages Leaf
is seeking and arguing that Leaf is entitled, at most, to nominal
damages. Invenergy also asserted that any obligation it owes to
Leaf is excused because of the put/call process described in the
interim statements. On this same date, Invenergy also filed a
motion to amend its original answer to the lawsuit to add five
additional affirmative defences and two counterclaims.
-- On 6 October 2016, the Court heard oral arguments by the
parties on the Leaf and Invenergy motions.
-- In two orders on 7 and 10 October 2016 which can be
downloaded and viewed in their entirety at the following URL:
http://www.leafcleanenergy.com/media-relations/download-centre/,
the Court denied Leaf's and Invenergy's motions, apart from
allowing one of Invenergy's counterclaims.
o The Court allowed Invenergy to assert a counterclaim against
Leaf alleging that Leaf acted in bad faith by causing its appraiser
in the put/call to provide a biased and inaccurate appraisal.
o The Court made additional rulings, including: 1) finding that
Leaf's claims are not excused as a result of Leaf exercising the
put, 2) that an exchange of mutual releases required in the
put/call will not moot the lawsuit, and 3) that Leaf's right to a
remedy for Invenergy's breach is not barred because Leaf did not
seek injunctive relief to block the closing of the TerraForm
Transaction.
-- On 7 April 2017, the third appraisal in the put-call process
was completed by an appraiser mutually selected by Leaf and
Invenergy. This appraiser valued Leaf's 2.3% stake in Invenergy at
$42.5 million.
-- A trial was held by the Court on 25-27 October 2017 to
determine the damages that will be awarded to Leaf due to
Invenergy's breach and to rule on Invenergy's counterclaim. The
Court held post-trial argument on 19 January 2018.
-- On 19 April 2018, the Court issued a post-trial opinion with
respect to Leaf's claims and Invenergy's counterclaim. In its
opinion, the Court held that Leaf is only entitled to nominal
damages of $1 as a result of Invenergy's breach of the Operating
Agreement. In addition, the Court rejected Invenergy's counterclaim
seeking a declaration that Leaf had breached certain provisions
governing Leaf's ability to put its shares, and Invenergy's ability
to call those shares, and ordered the parties to complete the
put/call process in accordance with the Operating Agreement.
-- On 14 June 2018, the Court entered its final order and
judgment with respect to Leaf's claims and Invenergy's
counterclaim, awarding Leaf nominal damages of $1 as a result of
Invenergy's breach of the Operating Agreement by engaging in a
defined "Material Partial Sale" without either obtaining Leaf's
consent or paying Leaf a contractually defined return on its
investment. The Court's final order also entered judgment in Leaf's
favor on Invenergy's counterclaim seeking a declaration that Leaf
had breached certain provisions governing Leaf's ability to put its
shares, and Invenergy's ability to call those shares, thereby
establishing the redemption price to be paid to Leaf in connection
with that put/call process at $50.7 million.
The final order and judgment contemplated that, in the event
Leaf appealed the Court's award of nominal damages in its final
order and judgment, Invenergy intended to cross-appeal the Court's
determination with respect to its counterclaim and therefore would
be obligated to pay Leaf $36.4 million, representing an amount that
Invenergy does not contest is owed to Leaf, within 5 business days
of Leaf's notice of appeal and that the remainder of the redemption
price would be paid into an interest bearing account controlled by
the Court to be distributed following, and depending on, the
appeal. Leaf continues to believe, as the Court found, that
Invenergy's counterclaim is without merit.
The Court's orders of 19 April 2018 and 14 June 2018 can be
downloaded and viewed in their entirety at the following URL:
http://www.leafcleanenergy.com/media-relations/download-centre/.
-- Also on 14 June 2018, following entry of the Court's final
order and judgment, Leaf filed its notice of appeal to the Delaware
Supreme Court.
-- On 20 June 2018, as ordered by the Court, Invenergy redeemed
all of Leaf's ownership interests in Invenergy, paying Leaf $36.4
million. Subsequently, Invenergy deposited an additional $15.3
million into the Court-controlled account.
-- On 25 June 2018, Invenergy filed its notice of cross-appeal
related to its counterclaim to the Delaware Supreme Court.
Developments during the period:
-- The Delaware Supreme Court heard oral argument in Leaf's
appeal of the damages awarded to it in the Invenergy lawsuit on 13
February 2019. Leaf anticipates that the Delaware Supreme Court
will issue its opinion within 90 days of the date of the oral
argument.
Other highlights
-- On 4 July 2018, Leaf repurchased and cancelled 65,592,161 of
the 118,162,853 shares that were outstanding as at 30 June 2018.
The Redemption was completed on 10 July 2018, following payment to
the holders of the cancelled shares. In relation to the Redemption
Leaf has booked a liability of $25.7 million in the accounts as at
30 June 2018 and has accordingly reduced share capital and premium
by this same aggregate amount. Following the 4 July 2018
cancellation of the repurchased shares, there were 52,570,692
ordinary shares in issue.
Financial performance
The Leaf Group's total net asset value (NAV) on 31 December 2018
was $16.7 million, $2.7 million lower than on 30 June 2018. This
change resulted mainly from the $1.7 million comprehensive loss for
the period, which in turn consisted primarily of $1.0 million of
administration expenses and $0.6 million of transaction-related
costs. In addition, there was a $1.0 million write
down upon revaluation of the investments. At the end of the
period, $2.3 million of Leaf's NAV was held in cash and $1.0
million in investments.
NAV per share for the Leaf Group was 31.67 cents or 24.82 pence
at $1.2760 to the GBP1. This was a decrease of 13.9 per cent for
the six-month period from 30 June 2018. The decrease was entirely
due to the expenses for the period. Due to the decrease in the
value of the GBP relative to the US dollar over the period, NAV per
share in pence decreased by 10.9%, as the 3.4 per cent decrease in
the GBP/$ exchange rate over the six-month period partly offset the
US dollar loss in GBP terms as a result of the translation of
Leaf's mostly US dollar denominated NAV into GBP.
Leaf's administrative expenses for the six-month period ended 31
December 2018 were $261 thousand higher than the comparable prior
period, due to unbudgeted employee severance costs. Without these
costs, having otherwise adhered to the previously announced $1.55
million budget for the current fiscal year, Leaf would have been
below budget and on track to meet this budget for the full year.
Note that, due to uncertain timing and amounts the budget did not
include transaction-related costs or payments under the Company's
incentive plans. Leaf has not accrued anything for future
transaction costs. Leaf has made an $820 thousand provision for
contingent costs associated with concluding the Invenergy lawsuit
and returning cash to the shareholders.
Portfolio update
Key updates regarding Leaf's portfolio companies during the
interim report period included the following:
Vital Renewable Energy Company (VREC)
VREC, a renewable energy company focused on the development of
sugar-cane-based ethanol and sugar concluded its 2018/2019 crushing
season with strong year over year performance. Additionally, VREC
completed its industrial expansion program and is well positioned
to leverage its capacity to deliver further growth once its
agricultural program is fully developed.
Energía Escalona (Escalona)
Escalona, the hydroelectric project development company based in
Mexico City, has obtained its wholesale electricity generation
permit. Escalona will need to modify certain other permits of the
project in order to comply with the requirements of this permit and
such efforts are currently ongoing. In conjunction with the
aforementioned project related activities, Leaf and its partner
continue to review strategic options for this late-stage
development project.
In the coming months, the Leaf Board and management will
continue to focus on achieving realisations of the remaining assets
and resolution of the Invenergy lawsuit appeal to enable additional
future distributions to the shareholders. The Leaf Board and
management have maintained and will continue to maintain an
appropriate cash balance to ensure that Leaf can continue to
execute its strategy.
27 March 2019
Condensed consolidated statement of comprehensive income for the
six months ended 31 December 2018
Note (Unaudited) (Unaudited)
6 months ended 6 months ended
31 December 31 December
2018 2017
$'000 $'000
Net (loss)/gain on investments at fair
value through profit or loss 12.1 (1,000) 620
Net foreign exchange (loss)/gain (46) 23
Other income - 2
Gross portfolio (loss)/return (1,046) 645
Transaction-related costs 7 (627) (3,009)
Administration expenses 6 (1,032) (771)
Interest on shareholders loan and amortisation
of loan facility fee - (89)
Provision for doubtful intercompany
receivable (49) (11)
Contingent costs provision reversal/(expense) 8 60 (3,450)
------------------------------------------------ ----- ---------------- ----------------
Loss before taxation (2,694) (6,685)
------------------------------------------------ ----- ---------------- ----------------
Taxation 18 (1) 8,039
------------------------------------------------ ----- ---------------- ----------------
Total (loss)/gain and total comprehensive
(loss)/income for the period (2,695) 1,354
================================================ ===== ================ ================
(Loss)/earnings for the period attributable
to equity holders (2,695) 1,354
Basic and diluted (loss)/earnings per
share (cents) 10 (5.13) 1.15
================================================ ===== ================ ================
The accompanying notes form an integral part of these interim
condensed consolidated financial statements.
Condensed consolidated statement of financial position as at 31
December 2018
(Unaudited) (Audited)
Note 31 December 2018 30 June 2018
$'000 $'000
Assets
Investments at fair value through
profit or loss 12.1 1,000 2,000
Total non-current assets 1,000 2,000
---------------------------------------- ----- ------------------- -------------
Cash and cash equivalents 2,320 29,975
Trade and other receivables 14 48 106
Additional proceeds receivable
from put/call redemption of Invenergy
stake 19 14,237 14,237
Total current assets 16,605 44,318
---------------------------------------- ----- ------------------- -------------
Total assets 17,605 46,318
======================================== ===== =================== =============
Equity
Share capital 17 18 18
Share premium 17 271,310 271,310
Retained losses (254,677) (251,982)
---------------------------------------- ----- ------------------- -------------
Total equity 16,651 19,346
---------------------------------------- ----- ------------------- -------------
Liabilities
Provision for future contingent
costs 820 880
Trade and other payables 15 134 347
Accrual for compulsory redemption
of shares - 25,745
Total current liabilities 954 26,972
---------------------------------------- ----- ------------------- -------------
Total liabilities 954 26,972
---------------------------------------- ----- ------------------- -------------
Total equity and liabilities 17,605 46,318
======================================== ===== =================== =============
Net asset value per share (cents) 31.67 36.80
======================================== ===== =================== =============
The accompanying notes form an integral part of these interim
condensed consolidated financial statements.
The interim condensed consolidated financial statements were
approved by the board of directors on 27 March 2019 and signed on
their behalf by:
Mark Lerdal Stephen Coe
Executive Chairman Non-Executive Director
Condensed consolidated statement of changes in equity for the
six months ended 31 December 2018
Share Capital Share Premium Retained Total
losses equity
$'000 $'000 $'000 $'000
------------------------------------------- -------------- -------------- ----------- ----------
Balance at 30 June 2018 (audited) 18 271,310 (251,982) 19,346
Total comprehensive loss for the period - - (2,695) (2,695)
Balance at 31 December 2018 (unaudited) 18 271,310 (254,677) 16,651
=========================================== ============== ============== =========== ==========
Share Capital Share Premium Retained Total
losses equity
$'000 $'000 $'000 $'000
--------------------------------------------- -------------- -------------- ----------- --------
Balance at 30 June 2017 (audited) 27 297,046 (208,799) 88,274
Total comprehensive income for the period - - 1,354 1,354
Balance at 31 December 2017 (unaudited) 27 297,046 (207,445) 89,628
============================================= ============== ============== =========== ========
The accompanying notes form an integral part of these interim
condensed consolidated financial statements.
Condensed consolidated statement of cash flows for the six
months ended 31 December 2018
(Unaudited) (Unaudited)
6 months ended 6 months ended
31 December 31 December
2018 2017
$'000 $'000
Cash flows from operating activities
Refund from account closure - 2
Transaction-related expenditures (1,080) (1,409)
Operating expenditures (778) (818)
Fees for shareholders loan - (125)
Advances to investee companies (6) (8)
Net cash used in operating activities (1,864) (2,358)
------------------------------------------- --------------- ---------------
Cash flows from investing activities
Additional proceeds from sale of
investments - 30
Net cash generated from investing
activities - 30
------------------------------------------- --------------- ---------------
Cash flows from financing activities
Proceeds from shareholders loan - 2,000
Partial redemption of shares (25,745) -
Net cash (used in)/generated from
financing activities (25,745) 2,000
------------------------------------------- --------------- ---------------
Net decrease in cash and cash equivalents (27,609) (328)
Cash and cash equivalents at start
of the period 29,975 2,286
Effect of exchange rate fluctuations
on cash and cash equivalents (46) 23
------------------------------------------- --------------- ---------------
Cash and cash equivalents at end
of the period 2,320 1,981
------------------------------------------- --------------- ---------------
The accompanying notes form an integral part of these interim
condensed consolidated financial statements.
Condensed consolidated statement of cash flows for the six
months ended 31 December 2018
(Unaudited) (Unaudited)
6 months ended 6 months ended
31 December 31 December
2018 2017
Reconciliation of total loss and total $'000 $'000
comprehensive loss for the period to
net cash used in operating activities
Total (loss)/gain and total comprehensive
(loss)/income for the period (2,695) 1,354
Adjustments for:
Increase/(Decrease) in net deferred tax
liability - (8,039)
Net unrealised loss/(gain) on investments
at fair value through profit or loss 1,000 (590)
(Decrease)/increase in provision for
future contingent costs (60) 3,450
Net foreign exchange loss/(gain) 46 (23)
Loan facility expenses - 21
Provision for doubtful intercompany receivables - 11
Net realised gain on investments at fair
value through profit or loss - (30)
Other income - (6)
Operating loss before changes in working
capital (1,709) (3,852)
Movement in trade and other receivables 58 (62)
Movement in trade and other payables (213) 1,556
Net cash used in operating activities (1,864) (2,358)
------------------------------------------------- --------------- ---------------
Notes to the interim condensed consolidated financial statements
for the six months ended 31 December 2018
1. Leaf
Leaf Clean Energy Company (the "Company" or "Leaf") was
incorporated and registered in the Cayman Islands on 14 May 2007.
Leaf was established to invest in clean energy projects,
predominantly in North America. Clean energy includes activities
such as the production of alternative fuels, renewable power
generation and the use of technologies to reduce the environmental
impact of traditional energy. The investments of Leaf will be
realised in an orderly and expedient manner, that is, with a view
to achieving a balance between: (i) returning cash to Shareholders
at such times and from time to time and in such manner as the Board
may (in its absolute discretion) determine; and (ii) maximising the
realisation value of Leaf's investments. In light of the
realisation strategy, there will be no specific investment
restrictions applicable to Leaf's portfolio going forward.
The shares of Leaf were admitted to trading on the AIM market of
the London Stock Exchange ("AIM") on 28 June 2007 when dealings
also commenced.
During the period, Leaf's executive chairman, agents, and
management team (the latter being employees of Leaf) performed all
significant functions.
The interim condensed consolidated financial statements as at
and for the six months ended 31 December 2018 are for the Leaf
Group. Refer to note 16.
The consolidated financial statements of the Leaf Group as at
and for the six-month period ended 31 December 2018 are available
upon request from Leaf's registered office at PO Box 309, Ugland
House, George Town, Grand Cayman KY1-1104, Cayman Islands or at
www.leafcleanenergy.com.
2. Statement of compliance
These interim condensed consolidated financial statements have
been prepared in accordance with IAS 34 Interim Financial
Reporting. They do not include all of the information required for
full annual financial statements and should be read in conjunction
with the consolidated financial statements of Leaf as at and for
the year ended 30 June 2018.
These interim condensed consolidated financial statements were
approved by the board of directors on 27 March 2019.
3. Significant accounting policies
Save as for explained above, the accounting policies applied by
Leaf in these interim condensed consolidated financial statements
are the same as those applied by Leaf in its consolidated financial
statements as at and for the year ended 30 June 2018.
4. Use of estimates and judgements
The preparation of interim condensed consolidated financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
The significant judgements made by management in applying Leaf's
accounting policies and the key sources of estimation uncertainty
were the same as those applied to the consolidated financial
statements as at and for the year ended 30 June 2018.
The most significant area requiring estimation and judgement by
the directors is the valuation of unquoted investments, (see note
12).
5. Financial risk management
The Leaf Group's financial risk management objectives and
policies are consistent with those disclosed in the consolidated
financial statements as at and for the year ended 30 June 2018.
The below table summarises the valuation methodologies and key
assumptions in deriving the aggregate fair value of the investments
as at 31 December 2018 of $1.0 million (30 June 2018: $2.0
million):
Significant inputs
Name of Investment Valuation methodology / assumptions
------------------------------------- ---------------------- ----------------------------
Vital Renewable Energy Company, Market multiples Choice of comparable
LLC ("VREC") companies, publicly
available data about
operating results
Energia Escalona s.r.l. ("Escalona") Income approach Forecast cash flows
discount rate
------------------------------------- ---------------------- ----------------------------
The below table summarises the valuation methodologies and key
assumptions in deriving the aggregate fair value of the investments
as at 30 June 2018.
Significant inputs
Name of Investment Valuation methodology / assumptions
------------------------------------- ---------------------- ----------------------------
Vital Renewable Energy Company, Market multiples Choice of comparable
LLC ("VREC") companies, publicly
available data about
operating results
Energia Escalona s.r.l. ("Escalona") Income approach Forecast cash flows
discount rate
6. Administration expenses
(Unaudited) (Unaudited)
6 months ended 6 months ended
31-Dec-18 31-Dec-17
$'000 $'000
Salaries and related costs (2) 573 255
Directors' remuneration (note 9) 173 173
Administration fees 75 75
Other expenses 67 73
Legal and professional fees (1) 61 106
Audit fees 32 31
Directors' and officers' insurance expense 27 26
Rental fees 20 19
Travel and subsistence expenses 4 13
Total 1,032 771
============================================ =============== ===============
(1) Administration expenses do not include transaction related
legal or professional services costs, which are reported as
transaction related expenses on the condensed consolidated
statement of comprehensive income.
(2) Salaries and related costs include one-time severance
payments to employees which were paid out after the period end, in
January 2019. These payments have been accrued as part of the
contingent costs provision and will be deducted from any incentive
plans payments made to these employees in respect of any future
returns of cash to the shareholders.
7. Transaction-related costs
The amount disclosed for the six months period ended 31 December
2018 consists primarily of legal and professional services costs
incurred during the period in connection with the complaint filed
on 21 December 2015 by Leaf against Invenergy Renewables LLC,
including Leaf's ongoing appeal of the damages award and defence of
Invenergy's cross-appeal.
8. Contingent costs provision
The Leaf Board has adopted incentive compensation arrangements
for Leaf and its advisors under which Company payees will receive
incentive payments only when cash is returned to the shareholders
and certain advisors may receive incentive payments depending on
any additional damages awarded Leaf following the conclusion of the
Invenergy lawsuit. The arrangements for Leaf payees include a
sliding scale of incentives based on cash returned to the
shareholders, in addition to severance payments to Leaf employees
to be deducted from any future incentive payments owed to employees
under these arrangements. As at 31 December 2018, the Leaf Group
updated its prior estimate of these contingent costs to be $0.82
million (30 June 2018: $0.88 million), using an estimate of total
cash that will be returned to the shareholders that is based on the
31 December 2018 net asset value, including net proceeds expected
from the $14.2 million of additional put/call proceeds from
Invenergy, less the estimated remaining cash requirements of Leaf
in completing the appeal of the Invenergy lawsuit and the
realisation of the remaining investments. Revisions to the estimate
of total cash that will be returned to shareholders and other
factors result in adjustments to the provision for future incentive
payments, which are recognised in profit or loss during the period
of the adjustment.
9. Directors' remuneration
Details of the directors' basic annual remuneration areas in
effect during the period was as follows:
31 December 2018 Basic annual remuneration
$'000
Mark Lerdal (chairman) 250
Stephen Coe (non-executive director) 70
Peter O'Keefe (non-executive director) 25
345
======================================== ==========================
Directors' fees and expenses payable during the six months ended
31 December 2018 were:
31 December 2018 Directors' Reimbursements Total
fees
$'000 $'000 $'000
Mark Lerdal (Chairman) 125 3 128
Stephen Coe 35 - 35
Peter O'Keefe 13 - 13
173 3 176
======================== =========== =============== ======
31 December 2017 Directors' Reimbursements Total
fees
$'000 $'000 $'000
Mark Lerdal (Chairman) 125 10 135
Stephen Coe 35 - 35
Peter O'Keefe 13 - 13
173 10 183
======================== =========== =============== ======
Each director is also entitled to receive reimbursement of any
expenses in relation to their appointment. Total reimbursement to
the directors for the six-months ended 31 December 2018 amounted to
$3,403 (2017: $9,952) of which $3,403 was outstanding at 31
December 2018 (2017: $nil).
During the period the directors approved a 70% reduction to all
directors' fees with effect from 1 January 2019. Whilst the Company
has sufficient cash reserves, this reduction is made in-line with
its strategy of realisation, as the Company seeks to return cash to
shareholders in an orderly manner. Additionally, the employees and
administrator have agreed to reduced salaries and fees.
10. Basic earnings/loss per share
Basic and Diluted
Basic and diluted earnings/(loss) per share is calculated by
dividing the earnings/(loss) attributable to equity holders of Leaf
by the weighted average number of ordinary shares in issue during
the period:
(Unaudited) (Unaudited)
6 months ended 6 months ended
31 December 2018 31 December 2017
Earnings/(loss) attributable to equity holders ($'000) (2,695) 1,354
Weighted average number of ordinary shares in issue (thousands) 52,571 118,163
----------------------------------------------------------------- ------------------ ------------------
Basic and fully diluted earnings/(loss) per share (cents) (5.13) 1.15
================================================================= ================== ==================
There is no difference between the basic and diluted loss per
share for the period.
11. Investments
Investments in underlying investee companies (held through
various wholly owned intermediary subsidiaries) comprise membership
units, ordinary stock, and preferred stock, preferential return of
capital and capped rights to share in profits. The directors, with
advice from Leaf's employee management team, have reviewed the
carrying value of each investment and calculated the aggregate
value of the Leaf Group's portfolio. Investments are measured at
the directors' estimate of fair value at the reporting date, in
accordance with IAS 39 'Financial Instruments: Recognition and
measurement.
12. Critical accounting estimates and assumptions
These disclosures supplement the commentary on the use of
estimates and judgments (see note 4).
Key sources of estimation uncertainty
Determining fair values
The determination of fair values for financial assets for which
there is no observable market prices requires the use of valuation
techniques as described in accounting policy 3.1 from the 30 June
2018 financial statements. For financial instruments that trade
infrequently and have little price transparency, fair value is less
objective, and requires varying degrees of judgement depending on
liquidity, concentration, uncertainty of market factors, pricing
assumptions and other risks affecting the specific instrument. See
also "Valuation of financial instruments" below.
Critical judgements in applying the Leaf Group's accounting
policies
Critical judgements made in applying the Leaf Group's accounting
policies include:
Valuation of financial instruments
The Leaf Group's accounting policy on fair value measurements is
discussed in accounting policy 3.1 from the 30 June 2018
consolidated financial statements. The Leaf Group measures fair
value using the following hierarchy that reflects the significance
of inputs used in making the measurements:
-- Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.
-- Level 2: Valuation techniques based on observable inputs,
either directly (i.e., as prices) or indirectly (i.e., derived from
prices). This category includes instruments valued using: quoted
market prices in active markets for similar instruments: quoted
market prices for identical or similar instruments in markets that
are considered less than active; or other valuation techniques
where all significant inputs are directly or indirectly observable
from market data.
-- Level 3: Valuation techniques using significant unobservable
inputs. This category includes all instruments where the valuation
technique includes inputs not based on observable data and the
unobservable inputs have a significant effect on the instrument's
valuation. This category includes instruments that are valued based
on quoted prices for similar instruments where significant
unobservable adjustments or assumptions are required to reflect
differences between the instruments.
Fair values of financial assets and financial liabilities that
are traded in active markets are based on quoted market prices or
dealer price quotations. For all other financial instruments the
Leaf Group determines fair values using valuation techniques.
Leaf, through its wholly-owned subsidiaries, holds full or
partial ownership interests in two unquoted clean energy companies.
These investments are classified as level 3 in the fair value
hierarchy.
12.1 Investments at fair value through profit or loss
The following table shows a reconciliation of the opening
balances to the closing balances for fair value measurements in
Level 3 of the fair value hierarchy.
(Unaudited) (Audited)
Year ended Year ended
31 December 2018 30 June 2018
---------------------------------------------------------- ------------------ --------------
Balance brought forward 2,000 101,410
Proceeds from sale of investments - (36,462)
Additional proceeds receivable from sale of investments - (14,237)
Movement in fair value of investments (1,000) (48,711)
Balance carried forward 1,000 2,000
---------------------------------------------------------- ------------------ --------------
Total gain/(losses) for the year included in (1,000)
profit or loss relating to investments held at -
the end of the reporting period.
========================================================== ================== ==============
Investments are stated at fair value through profit or loss on
initial recognition. All investee companies are unquoted. Leaf has
an established control framework with respect to the measurement of
fair values. The directors, with advice from the management team,
has overall responsibility for all significant fair value
measurements, including Level 3 fair values. The management team
regularly reviews significant unobservable inputs and valuation
adjustments.
12.2 (a) Significant unobservable inputs used in measuring fair
value
The table below sets out information about significant
unobservable inputs used at 31 December 2018 in measuring financial
instruments categorised as Level 3 in the fair value hierarchy.
Sensitivity to
Fair value at 31 changes in
December 2018 Valuation Unobservable significant
Description $'000 technique input Range unobservable inputs
----------------- ----------------- ------------------ ------------------ ------------------ --------------------
Unlisted private $1,000 Market multiples, Operational $41.5/mm tons - The estimated fair
equity income approach multiples $67.5/mm tons value would
investments increase (decrease)
if the operational
multiples were
higher/lower.
Discount rates 7.2% The estimated fair
value would
increase/(decrease)
if the discount
rate were
lower/higher
Forecast cash n/a n/a
flows
The table below sets out information about significant
unobservable inputs used at 30 June 2018 in measuring financial
instruments categorised as Level 3 in the fair value hierarchy.
Sensitivity to
changes in
Fair value at 30 Valuation Unobservable significant
Description June 2018 $'000 technique input Range unobservable inputs
----------------- ------------------ ----------------- ------------------ ------------------ --------------------
Unlisted private $2,000 Market Operational $54/mm tons - The estimated fair
equity multiples, multiples $57/mm tons value would
investments income approach increase (decrease)
if the operational
multiples were
higher/lower.
Discount rates 7.2% The estimated fair
value would
increase/(decrease)
if the discount
rate were
lower/higher
Forecast cash n/a n/a
flows
Significant unobservable inputs are developed as follows.
Operational multiples: Represent amounts that market
participants would use when pricing the investments. Operational
multiples are selected from comparable public companies based on
geographic location, industry, size, target markets and other
factors that management considers to be reasonable. The traded
multiples for the comparable companies are determined by dividing
the enterprise value of the company by its operational metric and
further adjusted if appropriate for considerations such as the lack
of marketability and other differences between the comparable peer
group and specific company.
Discount rate: Represents the rate used to discount projected
levered or unlevered forecasted cash flows and terminal value for a
project or company to their present values as part of the
calculation of enterprise value for the project or company, or for
the expected cash flows to Leaf from a forecasted transaction.
Forecast cash flows: Cash flows are forecast by Leaf by
considering possible operational scenarios and transaction terms,
the amount to be paid or received under each scenario and the
probability of each scenario.
12.2 (b) Effects of unobservable input on fair value
measurement
Although Leaf believes that its estimates of fair value are
appropriate, the use of different methodologies or assumptions
could lead to different measurements of fair value. For fair value
measurements in Level 3, changing one or more of the assumptions
used to reasonably possible alternative assumptions would have the
following effects on Leaf's net asset value (NAV) at 31 December
2018 ($ millions): (Favourable: 0.2, Unfavourable: 0.0).
The favourable and unfavourable effects of using reasonably
possible alternative assumptions for the above unobservable inputs
for the valuation of Leaf's unlisted private equity investments
have been calculated by varying these inputs in the applicable
valuation models based on a reasonable lower and upper range as
determined by Leaf Management. The most significant unobservable
inputs are the discount rate, and operational multiples. The
discount rate used in the models at 31 December 2018 was 7.2% (with
reasonably possible alternative assumptions ranging between 6.2%
and 8.2%). The operational multiples used in the model at 31
December 2018 ranged between $41.5/mm tons and $67.5/mm tons, with
reasonably possible alternative assumptions of $41.5/mm tons to
$67.7/mm tons.
For fair value measurements in Level 3, changing one or more of
the assumptions used to reasonably possible alternative assumptions
would have the following effects on Leaf's net asset value (NAV) at
30 June 2018 ($ millions): (Favourable: 1.0, Unfavourable:
(1.0)).
The favourable and unfavourable effects of using reasonably
possible alternative assumptions for the above unobservable inputs
for the valuation of Leaf's unlisted private equity investments
have been calculated by varying these inputs in the applicable
valuation models based on a reasonable lower and upper range as
determined by Leaf Management. The most significant unobservable
inputs are the discount rate, and operational multiples. The
discount rate used in the models at 30 June 2018 was 7.2% (with
reasonably possible alternative assumptions ranging between 6.2%
and 8.2%). The operational multiples used in the model at 30 June
2018 ranged between $54/mm tons and $57/mm tons, with reasonably
possible alternative assumptions of $41.5/mm tons to $72/mm
tons.
13. Financial instruments not measured at fair value
The financial instruments not measured at fair value through
profit or loss are short-term financial assets and financial
liabilities whose carrying amounts approximate their fair value,
these are all categorised within level 2 of the fair value
hierarchy.
14. Trade and other receivables
(Unaudited) (Audited)
31 December 2018 30 June 2018
$'000 $'000
Prepayments 45 103
Other receivables 3 3
Total 48 106
------------------- ------------------ --------------
Amounts due from group companies are unsecured, interest free
and receivable on demand.
15. Trade and other payables
(Unaudited) (Audited)
31 December 2018 30 June 2018
$'000 $'000
Other creditors 102 282
Audit fees payable 32 65
Total 134 347
-------------------- ------------------ --------------
16. The subsidiaries
The following subsidiaries of the Leaf Group are held at fair
value on the consolidated financial statements in accordance with
IFRS 10:
Country of Principal activity Effective interest held
incorporation
------------------------------------------ ---------------- -------------------- ------------------------
Escalona Coopertief U.A Netherlands Hydro Energy 87.5%
Escalona B.V Netherlands Hydro Energy 87.5%
Energentum Renewable Energy S.A. de C.V. Mexico Hydro Energy 87.5%
Energía Escalona s.r.l. Mexico Hydro Energy 51.2%
Leaf Invenergy Company Cayman Islands 100%
Leaf Biomass Investments, Inc. USA (Delaware) 100%
Leaf VREC Company Cayman Islands 100%
17. Share capital
Ordinary shares of GBP0.0001 Number of shares Share capital Share premium
each
$'000 $'000
At 31 December 2018 52,570,692 18 271,310
At 30 June 2018 52,570,692 18 271,310
Leaf resolved to repurchase and cancel 65,592,161 shares on 22
June 2018. In relation to this repurchase, Leaf had booked a
liability of $25.7 million as at 30 June 2018 and had reduced share
capital and premium by this same aggregate amount. Following the
cancellation of the repurchased shares on 4 July 2018, there were
52,570,692 ordinary shares in issue.
The authorised share capital of the Leaf Group is GBP25,000
divided into 250 million Ordinary Shares of 0.0001 each.
Under the terms of the placement on 22 June 2007, Leaf issued
200,000,000 shares of GBP0.0001 each par value at a price of GBP1
each. The difference between the issue price and the par value was
transferred to share premium account, net of share issue
expenses.
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of Leaf. All shares rank equally with regards to
the Leaf Group's assets.
Capital management
At an extraordinary general meeting ("EGM") held on 1 July 2014,
Leaf's shareholders voted to accept the board's proposed resolution
to change the Leaf Group's investment strategy to an orderly
realisation and return of capital to the shareholders, which will
occur on an asset-by-asset basis in timeframes appropriate for each
asset. The details of the new strategy are disclosed in the EGM
circular for this meeting, which can be found on Leaf's
website.
The Leaf Group's capital comprises share capital, share premium
and reserves and is not subject to externally imposed capital
requirements.
18. Income tax
(Unaudited)
(Unaudited) Six months
Six months ended ended
31 December 31 December
2018 2017
$'000 $'000
--------------------------------------------- ------------------ ------------
Current tax expense
Current year 1 -
- -
--------------------------------------------- ------------------ ------------
Deferred tax expense
Temporary differences - (8,039)
- -
--------------------------------------------- ------------------ ------------
Tax expense/(gain) on continuing operations 1 (8,039)
--------------------------------------------- ------------------ ------------
The Leaf Group believes that its accruals for tax liabilities
are adequate for all open tax years based on its assessment of many
factors, including interpretations of tax law and prior
experience.
(Unaudited)
Balance as at 31 December
2018
-----------------------------------------
(Audited)
Net balance Recognised Deferred Deferred
2018 at in tax tax
profit or
loss during
$'000 01 July 2018 the period Net assets liabilities
----------------------------- --------------------------- ------------- ---- --------------------- ------------
Investments held at
fair value through
profit and loss - - - - -
Net tax assets (liabilities) - - - - -
----------------------------- --------------------------- ------------- ---- --------------------- ------------
19. Investment in Invenergy
On 21 December 2015, as previously announced, Leaf filed a
lawsuit in Delaware Court of Chancery (the "Court") against
Invenergy alleging, in part, that Invenergy breached the Third
Amended and Restated Limited Liability Company Agreement governing
the membership interests in Invenergy (the "Operating Agreement").
Leaf alleged that Invenergy was required to either obtain Leaf's
prior consent to a sale of 832 megawatts of Invenergy's wind power
generation facilities to TerraForm Power for approximately $2
billion (the "TerraForm Transaction"), or, absent such consent,
make a payment to Leaf upon the closing date of the sale.
On 28 December 2015, Invenergy exercised its rights under the
Operating Agreement to redeem the LLC membership units owned by
Leaf, and Leaf exercised its right to put these units to
Invenergy.
On 7 January 2016, Leaf received a $3.9 million cash
distribution from Invenergy pursuant to the terms of Invenergy's
Operating Agreement.
On 15 April 2016, Leaf filed a motion for partial judgment on
the pleadings with respect to its claim that Invenergy breached the
Operating Agreement.
On 30 June 2016, the Court granted Leaf's motion, ruling that,
because Invenergy did not obtain Leaf's prior consent to the
closing of the TerraForm Transaction, Invenergy breached the
Operating Agreement.
On 18 July 2016, Leaf filed a motion for entry of an order and
final judgment, asking the Court to order Invenergy to pay damages
of $126.1 million, based on the calculation of the Target multiple
per the terms of the Operating Agreement, less the $3.9 million
previously reported tax distribution from Invenergy, plus interest
on the net $122.2 million in damages at the Delaware statutory rate
of interest of 6%, compounded quarterly, from the date of the
breach.
On 12 August 2016 Invenergy filed an answering brief to Leaf's
motion, disputing that Leaf is entitled to the damages Leaf is
seeking and arguing that Leaf is entitled, at most, to nominal
damages. Invenergy also asserted in its brief that any obligation
it owes to Leaf is excused because of the put/call process
described in the interim statements. On this same date, Invenergy
also filed a motion to amend its original answer to the lawsuit to
add five additional affirmative defenses and two counterclaims.
On 6 October 2016, the Court heard oral arguments by the parties
on the Leaf and Invenergy motions. In two orders on 7 and 10
October 2016 which can be downloaded and viewed in their entirety
at the following URL:
http://www.leafcleanenergy.com/media-relations/download-centre/,
the Court denied Leaf's and Invenergy's motions, apart from
allowing one of Invenergy's counterclaims.
-- The Court allowed Invenergy to assert a counterclaim against
Leaf alleging that Leaf acted in bad faith by causing its appraiser
in the put/call to provide a biased and inaccurate appraisal. Leaf
believes this counterclaim to be without merit.
-- The Court made additional rulings, including: 1) finding that
Leaf's claims are not excused as a result of Leaf exercising the
put, 2) that an exchange of mutual releases required in the
put/call will not moot the lawsuit, and 3) that Leaf's right to a
remedy for Invenergy's breach is not barred because Leaf did not
seek injunctive relief to block the closing of the TerraForm
Transaction.
A trial was held by the Court on 25-27 October 2017 to determine
the damages that will be awarded to Leaf due to Invenergy's breach
and to rule on Invenergy's counterclaim. The Court held post-trial
argument on 19 January 2018.
On 19 April 2018, the Court issued a post-trial opinion with
respect to Leaf's claims and Invenergy's counterclaim. In its
opinion, the Court held that Leaf is only entitled to nominal
damages of $1 as a result of Invenergy's breach of the Operating
Agreement. In addition, the Court rejected Invenergy's counterclaim
seeking a declaration that Leaf had breached certain provisions
governing Leaf's ability to put its shares, and Invenergy's ability
to call those shares, and ordered the parties to complete the
put/call process in accordance with the Operating Agreement. As a
result of and following this ruling, Leaf wrote down its investment
in Invenergy from $99.1 million to $50.7 million, the amount
determined by the terms of the Operating Agreement governing the
put/call process.
On 14 June 2018, the Court entered its final order and judgment
in Leaf Invenergy Company, LLC v. Invenergy Wind LLC, C.A. No.
1830-VCL, awarding Leaf nominal damages of $1 as a result of
Invenergy's breach of the Operating Agreement by engaging in a
defined "Material Partial Sale" without either obtaining Leaf's
consent or paying Leaf a contractually defined return on its
investment. The trial court's final order also entered judgment in
Leaf's favor on Invenergy's counterclaim seeking a declaration that
Leaf had breached certain provisions governing Leaf's ability to
put its shares, and Invenergy's ability to call those shares,
thereby establishing the redemption price to be paid to Leaf in
connection with that put/call
process at $50.7 million. The final order and judgment
contemplated that, in the event Leaf appealed the Court's award of
nominal damages in its final order and judgment, Invenergy intended
to cross-appeal the Court's determination with respect to its
counterclaim and therefore would be obligated to pay Leaf $36.4
million, representing an amount that Invenergy does not contest is
owed to Leaf, within 5 business days of Leaf's notice of appeal and
that the remainder of the redemption price would be paid into an
interest bearing account controlled by the Court to be distributed
following, and depending on, the appeal.
Also on 14 June 2018, following entry of the Court's final order
and judgment, Leaf filed its notice of appeal to the Delaware
Supreme Court.
On 20 June 2018, as ordered by the Court, Invenergy redeemed all
of Leaf's ownership interests in Invenergy, paying Leaf $36.4
million. Subsequently, Invenergy deposited an additional $15.3
million into the Court-controlled account. On 25 June 2018,
Invenergy filed its notice of cross-appeal to the Delaware Supreme
Court.
Leaf continues to believe it is entitled to damages of $122.2
million (an additional $85.8 million over the $36.4 million Leaf
already received following the Court's 20 June 2018 final order)
plus pre-judgment interest. Taking into account the amount already
received from Invenergy, this would represent at least an
additional $85.8 million or 54.6 pence per pre-Redemption share.
Leaf has not recognized an asset for this amount in these
accounts.
Whilst Leaf believes it is entitled to the damages noted above
it is the case that if Leaf were to be unsuccessful in its appeal
then Leaf would receive additional amounts due under the put/call
process previously described in chairman's statements. Leaf
believes it would be due $50.7 million less the amount already
received from Invenergy of $36.4 million being 9.1 pence per
pre-Redemption share. Leaf has recognized a $14.2 million asset in
these accounts reflecting this additional expected put/call
proceeds receivable.
As noted above, Invenergy has filed a cross-appeal with the
Delaware Supreme Court, contesting the $50.7 million amount and
Invenergy has deposited $15.3 million, representing the disputed
amount plus one year of interest, in a court-controlled account
pending resolution of these matters.
The following key developments with respect to these proceedings
occurred during the one-year period ended 31 December 2018:
The Delaware Supreme Court heard oral argument in Leaf's appeal
of the damages awarded to it in the Invenergy lawsuit on 13
February 2019. Leaf anticipates that the Delaware Supreme Court
will issue its opinion within 90 days of the date of the oral
argument, and that the appeal and cross-appeal will be resolved by
sometime in the first half of 2019. However, this is just an
estimate provided by Leaf's litigation counsel and there can be no
assurance that these matters will be resolved by then.
Put/call process summary:
Invenergy called Leaf's interest in Invenergy on 28 December
2015. On the same day, Leaf put its interest to Invenergy in order
to mitigate its damages from Invenergy's breach. Each party
appointed a third-party appraiser to value Leaf's stake in
Invenergy. The results were $73.1 million (from the appraiser
appointed by Leaf) and $36.4 million (from the appraiser appointed
by Invenergy). In accordance with the Operating Agreement terms, a
third appraiser was retained jointly by Leaf and Invenergy to value
Leaf's interest in Invenergy and appraised the value of Leaf's
stake in Invenergy to be $42.5 million. Pursuant to the Operating
Agreement, the average of the three appraisals ($50.7 million)
should determine the price for Leaf's interest in Invenergy for
purposes of the put/call process. As noted above, Invenergy
asserted a counterclaim alleging that Leaf acted in bad faith by
allegedly causing its appraiser to provide a biased and inaccurate
appraisal. The Court ruled against Invenergy on its counterclaim.
Invenergy has filed a cross-appeal with respect to the Court's
ruling on its counterclaim.
20. Subsequent Events
There were no subsequent events to report.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BDGDXCGDBGCR
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