2nd Dec 2015 08:19
LONDON (Alliance News) - Renewable Energy Generation Ltd Wednesday said shareholders will vote at an extraordinary general meeting later this month to vote on the company's proposals to sell the company, wind up the business and return cash to shareholders.
The company also released its results for the last financial year, when it generated a pretax loss compared to a profit a year earlier despite revenue experiencing a healthy lift.
Back in October, the company received non-binding approaches from an unnamed but "highly credible" company for its subsidiary which holds all of the company's assets and operations. The buyer is a fund managed by BlackRock.
Importantly, the offer was not for the listed-company and only for the trading subsidiaries, meaning the listed-entity will be wound-down should shareholders approve the deal that is currently on the table.
Renewable Energy Generation are recommending shareholders accept the deal, and need at least 50% of the votes cast by shareholders at the extraordinary general meeting to be in favour of the proposals. That meeting will be held on December 18.
If approved, the company will push forward with the sale, delist from the London Stock Exchange and appoint liquidators to oversee the liquidation process, during which the majority of net cash will be returned to shareholders.
The initial target "and likely final" distribution to shareholders is expected to be around 60.0 pence per share, as announced back in October, which it aims to distribute to shareholders in January.
Once the liquidation process has been completed, the company said another distribution may be paid, but said at most this would be another 0.3 pence per share.
That 60.0 pence per share distribution represents over a 60% discount to the closing price of Renewable Energy Generation shares on October 8, the day before the offer was received.
Renewable Energy Generation shares were trading up 3.2% to 56.0 pence per share on Wednesday morning.
The assets being sought by the buyer include the company's net debt of GBP10.5 million, comprised of GBP26.0 million of debt, GBP2.7 million in restricted cash and GBP12.8 million of unrestricted cash.
Renewable Energy Generation is involved in solar, wind and biomass assets across the UK. It has four biomass operations, four solar operations and around 14 onshore wind farms, one of which is in Northern Ireland.
Importantly, the company said back in October that is was considering spinning off some of its assets once the deal was completed, but did not provide any further details about which assets that would involve.
On Wednesday, it said the deal with the buyer will see two sale and purchase contracts being implemented - one covering the sale of "part" of the company's wind and solar assets and a second covering the sale of the subsidiary.
In a separate statement, the company swung to a GBP4.4 million pretax loss in the year ended June 30, from a GBP2.9 million profit despite revenue rising to GBP12.0 million from GBP11.6 million.
The loss was caused by impairments against development assets rising to GBP12.8 million from only GBP1.9 million a year ago and because central administrative costs and administrative costs for its wind division both rose.
The substantial impairments and higher costs were partially offset by the company generating GBP15.4 million from selling its subsidiaries, compared to only GBP9.5 million a year ago.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.