31 Jul 2009 16:53
31 July 2009
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS IN THAT JURISDICTION
Renewable Energy Holdings plc ("REH")
£2.5 million loan from Utilico Limited, Placing and Subscription to raise approximately £1 million and review of strategy
Highlights
Utilico Loan and the Placing will allow REH to complete acquisition of local development partner Gamar and to develop the Kobylany Wind Farm through to financial close;
Kobylany Wind Farm is a proposed 30MW project which is estimated to be capable of producing approximately 78,000 MWh of electricity or approximately €8 million of revenue per annum at the project level once commissioned;
Independent wind assessment by PB Power, project assessment by Sgurr Energy have been conducted in relation to the proposed Kobylany Wind Farm Project; and
REH's Board will conduct a strategic review with a view to creating and realising value for shareholders from existing operational assets and development pipeline.
Renewable Energy Holdings plc (AIM: REH), the AIM quoted investor and operator of proven and innovative renewable energy technologies is pleased to announce that Utilico Limited, the Company's largest shareholder, has agreed to provide a £2.5 million loan to the Company. As all of the conditions precedent to the Utilico Loan have been satisfied it is available for drawdown immediately. The Utilico Loan is convertible in whole or in part into Ordinary Shares at any time before 31 July 2011, conditional upon the approval of the independent shareholders of REH on a poll at an extraordinary general meeting of the Company to be convened in due course, and upon receipt of a waiver from the Panel from the obligations of Utilico to make an offer for REH under Rule 9 of the City Code. Should such independent shareholder approval and such waiver be received, the Utilico Loan will, when Utilico exercises its conversion right, convert at a price of 30.25p per Ordinary Share. Draw down of funds under the Utilico Loan is not conditional upon such approval or waiver being given.
The Company also announces that it has, subject to the terms and conditions of the Placing, raised approximately £1 million before expenses by way of a placing of 3,845,832 New Ordinary Shares at a placing price of 24p per New Ordinary Share which was arranged by Ambrian Partners Limited and through a Subscription by certain Directors for 205,000 New Ordinary Shares at the same price. Application for admission to AIM of the New Ordinary Shares is being made on 31 July 2009 and dealings are expected to commence on 6 August 2009, and by no later than 2 September 2009 for all of the Placing Shares. The New Ordinary Shares will, on Admission, rank pari passu with the existing Ordinary Shares.
The net proceeds of the Utilico Loan, the Placing and Subscription are to be used primarily to finance the acquisition of the development company, Gamar and the development of the proposed 30MW wind farm project at Kobylany, Poland, which is currently owned by Gamar, through to financial close and for general working capital purposes.
The Board of REH also announces that it is undertaking a review of its current strategy with particular regard to how best to create and realise value for its shareholders from its existing operating assets and also from its development pipeline. This may include the partial or outright sale of some existing operational assets and pipeline projects or the leveraging of currently debt-free assets. Whilst an exclusivity agreement was in place with PVStrom, a photovoltaic developer in Sicily to acquire its existing photovoltaic developments, for the period up to the end of July, the Board are now considering a renewal period.
Mike Proffitt, CEO of REH said:
"Under the current market circumstances we are not expecting the equity for build out of the 30MW wind farm to come from the market, but more likely from farming in a development partner.
It is anticipated by the Board that we will now adopt a farm-in model for the construction of our pipe-line for the foreseeable future"
For further information please contact:
| Renewable Energy Holdings plc | Tel: 01624 641199 |
| Mike Proffitt, Chief Executive | |
| Ambrian Partners - Nominated Adviser & Broker | Tel: 020 7634 7405 |
| Richard Swindells / Andrew Craig
| |
| Financial Dynamics | Tel: 020 7831 3113 |
| Jonathon Brill/Billy Clegg/Edward Westropp/Alex Beagley |
This announcement does not constitute, or form any part of, an offer or an invitation to purchase any securities.
This announcement does not constitute an offer of, or the solicitation of any offer to buy, any Ordinary Shares to any person in any jurisdiction to whom or in which such offer or solicitation is unlawful. The distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdiction.
Ambrian Partners, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for the Company as Nominated Adviser and broker and for no one else in relation to the matters described in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Ambrian Partners or for providing advice in relation to the subject matter or contents of this announcement.
Renewable Energy Holdings plc
£2.5 million loan from Utilico Limited, Placing and Subscription to raise approximately £1m and adoption of strategic review
1. Convertible Loan and Placing
Renewable Energy Holdings plc (AIM: REH), the AIM quoted investor and operator of proven and innovative renewable energy technologies is pleased to announce that Utilico Limited, the Company's largest shareholder, has agreed to provide a £2.5 million loan to the Company. As all of the conditions precedent to the Utilico Loan have been satisfied it is available for drawdown immediately. The Utilico Loan is convertible in whole or in part into Ordinary Shares at any time before 31 July 2011, conditional upon the approval of independent shareholders of REH on a poll at an extraordinary general meeting of the Company to be convened in due course, and upon receipt of a waiver from the Panel from the obligations of Utilico to make an offer for REH under Rule 9 of the City Code. Should such independent shareholder approval and such waiver be received, the Utilico Loan will when Utilico exercises its conversion rights convert at a price of 30.25p per Ordinary Share. Draw down of funds under the Utilico Loan is not conditional upon such approval or waiver being given. Following the Placing, and on the basis that the Utilico Loan is able to be and is converted into Ordinary Shares, Utilico would hold a maximum of approximately 36.3 per cent. of the then issued share capital of REH (based on the total number of shares anticipated to be in issue following completion of the Placing).
The Utilico Loan will accrue interest at a rate of 10 per cent. per annum and will remain in place until at least 31 July 2011 unless it is converted by Utilico into Ordinary Shares in the Company or it is repaid early by REH. Utilico will also have the right to appoint an individual as a Non-Executive Director to the Board. The Board of REH will update Shareholders if this right is exercised.
The Company also announces that it has, subject to the terms and conditions of the Placing and Subscription, raised approximately £1 million before expenses by way of a placing of 3,845,832 New Ordinary Shares at a placing price of 24p per New Ordinary Share which was arranged by Ambrian Partners Limited and through a subscription by certain Directors for 205,000 New Ordinary Shares at the same price. Application for admission to AIM of the New Ordinary Shares is being made and dealings are expected to commence on 6 August 2009 and all of the New Ordinary Shares will be listed by 2 September 2009 at the latest. The New Ordinary Shares will, on Admission, rank pari passu with the existing Ordinary Shares.
The Company has been developing the Kobylany site along with Gamar since 2006. The proceeds of the Utilico Loan and the Placing will allow the Company to complete the acquisition of Gamar and the development of the Kobylany Wind Farm Project through to financial close, which is expected to take place in Q4 2009. Once fully commissioned, which is expected to take place in 2010 subject to appropriate funding being made available, the Kobylany Wind Farm Project is estimated to be able to produce approximately 78,000 MWh of electricity or €8 million of revenue per annum at the project level. To the extent that any of the net proceeds of the Utilico Loan and the Placing exceed the amount required to develop the Kobylany Wind Farm Project to financial close the proceeds will be used for general working capital purposes.
The Placing is entirely with institutional investors in the United Kingdom. Ambrian Partners is acting as Nominated Adviser and Broker in connection with the Placing.
2. The Kobylany Wind Farm Project
Development work in relation to the Kobylany Wind Farm Project started approximately eight years ago. REH has been involved in the project since 2006 and substantial progress has been made since this time. The Company has signed an exclusivity agreement to acquire 100 per cent. of the shares in Gamar which is exercisable on or before 5 August 2009 and is in the process of negotiating a sale and purchase agreement in connection with this purchase. Pursuant to the exclusivity agreement, the Company has the option to acquire 100 per cent. of the shares in Gamar for a price constituting in Polish Zlotys the equivalent amount of €68,000 per 1 MW of generating capacity under development. The total purchase price of Gamar is therefore approximately €2.0 million. The Company has already made a pre-payment of €100,000 towards the purchase price. The Directors believe that proceeds of the Placing and the Utilico Loan will allow them to enter into the final agreements required to allow the Kobylany Wind Farm Project to progress to financial close.
Kobylany is situated a few kilometers south of Krosno in south east Poland and the Company plans to continue developing this project through to financial close, at which time it will either raise the equity required to fully commission the project or, as the Board currently expects, look for a partner to farm into the project or sell the project, should an attractive opportunity arise. The Kobylany Wind Farm Project is expected to generate enough electricity to supply over 20,000 homes. Polish law allows renewable electricity producers to sell to the local electricity grid operator on a priority of dispatch basis. The price the Group will receive for its power pursuant to this regulation is the average of the previous years' market price. Under Polish law, green certificates are awarded to the generators of renewable power and these certificates can then be traded on a power exchange. The trading system is based on a cap and trade structure similar to the UK ROC System.
Summary of development progress:
| Land acquired/optioned | Yes, by Gamar |
| Environmental permit | Yes |
| Planning permission | Yes, one amendment being made |
| Grid connection agreement | Offer in hand |
| Power purchase agreement | One offer in hand, late stage discussions on others |
| Project finance agreed | Term sheet received |
| EPC contract agreed | Firm proposal received |
| WOM contract agreed | Indicative proposal received |
It is proposed that the Kobylany Wind Farm Project will consist of 15 turbine sites near the villages of Kobylany, Draganowa and Lysa Gora in the vicinity of Dukla in the south east of Poland, close to the Slovakian border and will have a capacity of 30MW and is spread over three starostys (municipalities). The turbines will be erected in two clusters of three and a cluster of nine. The turbines will be located in rural areas, in exposed positions on the top of the low rolling hills that characterise the region. The wind is directional, with the predominant wind direction being from the south. This allows optimisation of location to maximise energy yield.
Another wind farm adjacent to the Kobylany Wind Farm Project is in operation. Martifer Renewables (previously Eviva) have erected five 2MW turbines at a location 3.7km to the west along the same ridgeline as the Kobylany Wind Farm Project. The Martifer power cable route runs to the same grid substation and follows an identical route to the Kobylany Wind Farm Project.
The key stage in the development process in Poland is obtaining all necessary building, environmental and other permits. Building permits (the equivalent of UK planning permission) are issued by the local Mayor for each Starosty (municipality). Once a permit has been awarded there is a two week period during which objectors may appeal the permit. If no appeals are made, or if appeals which have been made are rejected, the permit will be secured. An environmental decision (permit) is also required and is in place. It limits activity between 15 April and 15 August in each year to protect ground nesting birds. Separate permissions are required to pass under rivers and roads. There are also several other permissions required, for example from the Polish Airforce. The Kobylany Wind Farm Project has received all necessary building, environmental and other permits. The appeal period has expired and the permits remain valid. The Group is however seeking to amend the building permit to permit the installation of the V80 turbines with hub heights of 100 meters. Gamar has secured the necessary leases of the relevant land required for the 15 wind turbines and substation to be built as planned for the Kobylany Wind Farm Project. Way leave agreements are being negotiated with all landowners on the cable routes.
The Kobylany Wind Farm Project will use 15 Vestas V80 turbines, which have a rated maximum power output of 2.0MW, manufactured by Vestas of Denmark. The Vestas V80 turbines have been in commercial operation for more than eight years and are in use around the world. There are over 2,700 V80 2MW turbines installed worldwide with over 38,000 Vestas turbines of all types worldwide. Vestas is listed on the Copenhagen stock exchange with a market capitalisation of approximately €9.7 billion. Vestas is the largest wind turbine manufacturer in the world with approximately 20 per cent. of world market share. (Source BTN Consult Aps March 2008).
PB Power, consultants to the Company have forecast that the net Annual Energy Production from the wind data collected is 70,710 MWh per annum with a Capacity Factor of 26.91 per cent. for 15 Vestas V80 Wind Turbine Generators with a 78 m hub height. PB Power have also prepared a preliminary EYA analysis on six months of recorded data from the site and forecast a net Annual Energy Production for Vestas V80 Wind Turbine Generators with hub heights of 78 and 100 m of 72,937 and 78,413 MWh per annum respectively, with Capacity Factors of 27.8 per cent. and 29.8 per cent. and an overall wind farm Availability estimated to 96 per cent.
Sgurr Energy was commissioned by REH to provide an independent review of the Kobylany Wind Farm Project, which focused on key technical issues which could affect delivery of the project, including turbine suitability, grid connection status, construction schedule and financial model inputs. Overall, SgurrEnergy reported that the Kobylany Wind Farm Project was based on proven technology and considered that appropriate assumptions have been used within the project schedules and financial model which the Directors have based their assessment upon.
3. Review of Strategy
The Board of REH also announces that it is undertaking a review of its current strategy with particular regard to how best to create and realise value for its shareholders from its existing operating assets and also from its development pipeline. This may include the partial or outright sale of some existing operational assets and pipeline projects or the leveraging of currently debt-free assets. Whilst an exclusivity agreement was in place with PVStrom, a photovoltaic developer in Sicily to acquire its existing photovoltaic developments, for the period up to the end of July, the Board are now considering a renewal period.
4. Placing Arrangements
The Placing and Subscription seeks to raise approximately £1 million (before expenses of the Placing) by the issue of the New Ordinary Shares. With effect from completion of the Placing and Subscription, an additional 4,050,832 Ordinary Shares will be in issue representing a 6.2 per cent. increase in the current issued Ordinary Share capital of the Company and approximately 5.8 per cent. of the enlarged issued Ordinary Share capital of the Company immediately following the Placing and the Subscription.
The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with the Ordinary Shares.
Application is being made to AIM for the New Ordinary Shares to be admitted to trading on AIM. It is expected that Admission of the New Ordinary Shares will become effective and that dealings in some of the New Ordinary Shares will commence on 6 August 2009, and by no later than 2 September 2009, for all of the New Ordinary Shares. Following completion of the Placing and Subscription there will be 69,609,501 Ordinary Shares in issue.
The Placing is conditional, inter alia, upon the following:
(i) Entry by the Company into the Utilico Loan;
(ii) Admission of the Placing Shares becoming effective on or before 8.00 a.m. on 6 August 2009 (or such later time and/or date as the Company and Ambrian may agree, being no later than 3.00 p.m. on 2 September 2009); and
(iii) the Placing Agreement having become unconditional in all other respects and not having been terminated in accordance with its terms before Admission of the Placing Shares.
It is expected that the definitive documents of title in respect of the Placing Shares will be delivered in uncertificated form under CREST on 6 August 2009.
5. Related Party
Pursuant to the terms of a placing letter dated 31 July 2009 between the Company and Ambrian, Utilico has agreed to subscribe for 1,041,666 New Ordinary Shares pursuant to the Placing. As Utilico is a substantial shareholder of the Company, this transaction must be disclosed as a related party transaction under rule 13 of the AIM Rules.
Pursuant to the Utilico Loan dated 31 July 2009 between the Company and Utilico, Utilico has agreed to provide a £2.5 million loan which will be convertible in whole or in part at any time following draw down of the loan until 31 July 2011, conditional upon independent shareholder approval and receipt from the Panel of a waiver from Utilico's obligations to make an offer for REH under Rule 9 of the Code, into a maximum of 8,264,463 Ordinary Shares at a price of 30.25p per Ordinary Share. If Utilico wishes to convert the loan amount outstanding under the Utilico Loan into Ordinary Shares during that time, it will notify the Company of its intention to do so. A circular convening a general meeting of the Company to obtain the approval of independent shareholders will be sent to Shareholders in due course.
The Utilico Loan has a 10% coupon which is payable on a half yearly basis for a two year period in cash. If the Utilico Loan is not converted into Ordinary Shares beforehand the Utilico Loan is required to be repaid by 31 July 2011. If the Company does not acquire 100% of the shares in Gamar within 6 months of the date the Utilico Loan is entered into, Utilico may declare that the £2.5 million commitment be cancelled and that the funds, together with accrued interest, shall become immediately due and payable. The Utilico Loan will be principally secured over the entire issued share capital of Gamar. As Utilico is a substantial shareholder of the Company, this transaction must be disclosed as a related party transaction under rule 13 of the AIM Rules.
The Directors consider, having consulted with the Company's Nominated Adviser, Ambrian, that the terms of the subscription by Utilico, and the Utilico Loan, are fair and reasonable insofar as its Shareholders are concerned.
6. Directors Shareholdings
Certain Directors and management of the Company have agreed to subscribe for 205,000 New Ordinary Shares at the Placing Price representing approximately 0.29 per cent. of the Enlarged Issued Share Capital of the Company.
This announcement does not constitute, or form any part of, an offer or an invitation to purchase any securities.
This announcement does not constitute an offer of, or the solicitation of any offer to buy, any Ordinary Shares to any person in any jurisdiction to whom or in which such offer or solicitation is unlawful. The distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdiction.
Ambrian Partners, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for the Company as Nominated Adviser and Broker and for no one else in relation to the matters described in this announcement and will not be responsible to anyone other than the Company for providing the protections afforded to customers of Ambrian Partners or for providing advice in relation to the subject matter or contents of this announcement.
The Placing is directed exclusively at investment professionals (within Article 19(5) of the Financial Service and Markets Act 2000 (Financial Promotion Order) 2005 (as amended) and high net worth companies and associations (within Article 49(2) of the Financial Service and Markets Act 2000 (Financial Promotion Order) 2005 (as amended) (such categories of investors being referred to as "Relevant Persons" and no other person should respond to this announcement. Accordingly, this announcement is exempt from the general restriction set out in Section 21 of FSMA on the communication of invitations and inducements to engage in investment activity and has not been approved by a person who is authorised under FSMA.
THE NEW ORDINARY SHARES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED OR ANY OTHER APPLICABLE LAW OF THE UNITED STATES.
Appendix 1
DEFINITIONS AND GLOSSARY
The following definitions apply throughout this announcement, unless the context otherwise requires:
"Admission" admission of the New Ordinary Shares to trading on AIM becoming effective in accordance with rule 6 of the AIM Rules;
"AIM Rules" the AIM rules for companies issued by the London Stock Exchange;
"Ambrian" Ambrian Partners Limited, Nominated Adviser and broker to the Company;
"Availability" the operating availability of a wind turbine when the wind is blowing;
"Capacity Factor" the ratio of the actual energy produced by a wind turbine in a given period relative to the hypothetical maximum possible;
"City Code" the City Code on Takeovers and Mergers;
"Company" or "REH" Renewable Energy Holdings plc;
"Directors" the directors of the Company as at the date of this announcement, and Director shall mean any one of them;
"EYA" Energy Yield Assessment;
"EPC contract" an engineering, procurement and construction contract;
"Enlarged Share Capital" the issued ordinary share capital of the Company as enlarged by the issue of the New Ordinary Shares;
"€" the legal monetary currency of the European Union;
"Gamar" Gamar GHL Limited Liability Company;
"Group" the Company and its subsidiaries and subsidiary undertakings including where the context so requires, and following completion of its acquisition, Gamar;
"Independent Shareholders" all registered holders of Ordinary Shares except Utilico;
"Kobylany Wind Farm Project" the Company's proposed 30MW wind power project in Kobylany, Poland;
"MW" one million watts;
"MWh" megawatt hour, a unit used to express energy generated or delivered;
"New Ordinary Shares" the 4,050,832 Ordinary Shares to be issued pursuant to the Placing and the Subscription;
"Ordinary Shares" ordinary shares of 1p each in the capital of the Company;
"Panel" the Panel on Takeovers and Mergers;
"PB Power" Parsons Brinckerhoff, wind monitoring consultants to the Group;
"Placing" the placing of New Ordinary Shares as described in this announcement;
"Placing Agreement" the conditional agreement dated 31 July 2009 made between Ambrian, the Company and the Directors pursuant to which the New Ordinary Shares will be placed at the Placing Price;
"Placing Price" 24p per New Ordinary Share;
"Sgurr" Sgurr Energy Limited, renewable energy consultants to the Group in respect of the Kobylany Wind Farm Project;
"Subscription" the subscription by certain Directors for 205,000 new Ordinary Shares in the Company at the Placing Price;
"Shareholders" the registered holders of Ordinary Shares;
"£" the lawful currency of the UK;
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern Ireland;
"Utilico" Utilico Limited
"Utilico Loan" or the "Loan" the £2.5 million loan to be provided by Utilico to REH pursuant to a Shareholder Loan Agreement entered into between Utilico Ltd and Renewable Energy Holdings plc on 31 July 2009, as described in this announcement;
"Vestas" Vestas Windsystems AS;
"WOM" a warranty, operation and maintenance agreement; and
"Zloty" or "PLN" the legal monetary currency of Poland.
Unless otherwise stated, the exchange rates applied in this document are as follows: £1 = PLN 5.16 £1=€1.20