12th Aug 2009 14:03
Guanabara Holdings B.V.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO OR FROM AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
FOR IMMEDIATE RELEASE
Guanabara Holdings B.V. Cash Offer for EcoSecurities Group plc
Guanabara Holdings B.V. ("Guanabara") response to unaudited Interim Results of EcoSecurities Group plc ("EcoSecurities" or "the Company") and Response Circular
Guanabara notes the unaudited Interim Results for the six months ended 30 June 2009 ("Interim Results") announced by EcoSecurities on 4 August 2009 and the response circular dated 4 August 2009 in response to Guanabara's Offer.
Following careful analysis, Guanabara believes that the Interim Results serve to endorse its view that Guanabara's Cash Offer of 77 pence per share represents fair value for the Company. The main reasons for this conclusion are set out below.
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(1) |
EcoSecurities reported another reduction in its contracted portfolio, following a reduction in 2008:
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(a) |
the total contracted net amount of pre-2012 CERs reduced by circa 20 million tonnes to 124 million tonnes as at 30 June 2009; and
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(b) |
there was a significant reduction in the growth rate of expected CER volumes from registered projects. From 31 December 2007 to 31 December 2008, there was an increase of 169% (from 13 million tonnes to 35 million tonnes) but, from 31 December 2008 to 30 June 2009, the increase was 14% (from 35 million tonnes to 40 million tonnes). |
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(2) |
The announced €1.06m profit before tax was predominantly derived from financial activities as opposed to operational results as it included net finance income of €0.72m. The Company achieved an operating profit of only €0.34m on sales of €60.0m. Sales were derived mainly from:
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(a) |
the acceleration of deliveries of forward sales above the previously planned level;
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(b) |
substantial trading activity, whereby the Company sold 4,274,000 CERs, 3,712,000 of which had been bought in the secondary market; and
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(c) |
a significant reduction in the Company's inventory of CERs, from 1,710,000 CERs as at 31 December 2008 to just 263,000 as at 30 June 2009. |
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(3) |
Guanabara expects EcoSecurities' cash holdings to decrease in the short term as it funds the future development of carbon credits and as delays in registration, financing and construction continue to affect CER issuance. This is likely to be exacerbated by the reduction of the Company's CER inventory.
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(4) |
EcoSecurities has not provided any guidance as to profitability in the full financial year and beyond. |
Guanabara believes that continuing uncertainties in the global economy in general and the carbon markets in particular create an environment in which the future financial performance of EcoSecurities is likely to fluctuate significantly.
Guanabara believes further that the performance of all carbon companies will continue to be adversely affected by complicated regulation and administrative delays, as evidenced by Unep Risoe's recent reduction of the amount of CERs it expects to be generated by the end of 2012, because of increasing delays in the issuance of credits from projects that have been approved by the UN.
EcoSecurities' stock-exchange listed peers have recently reported write-downs in their contracted portfolios. Tricorona AB reported (23 July 2009) a reduction in its portfolio of carbon credits for delivery in the EU's second trading period 2008-2012 from circa 64 million tonnes to circa 55 million tonnes between 31 December 2008 and 30 June 2009. Camco International Limited announced (6 August 2009) a reduction in its risk adjusted contracted portfolio of JI and CDM projects from circa 94 million tonnes to circa 85 million tonnes between 31 March 2009 and 30 June 2009. Trading Emissions plc reported (11 August 2009) a reduction in its risk adjusted pre-2012 CER portfolio from circa 47 million tonnes to circa 43 million tonnes between 27 March 2009 and 11 August 2009.
The nature and scope of the carbon regulatory framework for the period following 2012 is as yet unknown. Recent press coverage from sources including Point Carbon, has highlighted that any agreement on the post-Kyoto period continues to be highly dependent on the political willingness of some of the world's largest countries and there continue to be many points which still require agreement. In particular, whilst there have been some developments in relation to potential new climate change regulations in the United States, there can be no certainty that a new regime will be agreed in the foreseeable future or that whatever regime does ultimately emerge will allow EcoSecurities to become active in the US market.
Guanabara's Offer is in cash and is the only offer currently available to EcoSecurities shareholders. In the event that Guanabara's Offer were to lapse and there was no alternative offer, the EcoSecurities share price would depend on the Company's trading performance and might not be maintained.
Guanabara would also like to highlight that all the parties which have given irrevocable undertakings not to accept Guanabara's Offer are connected in some way with the Company and its current management, either as directors, employees or, in the case of Credit Suisse International, have board representation. No independent shareholders have given any such undertakings.
The Offer price of 77 pence per share represents a substantial premium of approximately 141 per cent to 32 pence, the Volume Weighted Average Trading Price of an EcoSecurities Share over the six month period up to 5 June 2009, and a premium of approximately 69 per cent to the Closing Price of 45.5 pence per EcoSecurities' share on 4 June 2009, the last Business Day prior to the date of the announcement by Guanabara that it was considering an offer for EcoSecurities.
The Cash Offer represents an opportunity for EcoSecurities' Shareholders to monetise their investment in EcoSecurities shares at a time of great market volatility and economic uncertainty, particularly in the carbon markets.
The first closing date of Guanabara's Offer is 11 a.m. on 20 August 2009.
Commenting on EcoSecurities' Interim Results and response circular, Pedro Moura Costa, Guanabara's chairman, said:
"EcoSecurities' results illustrate the difficulties this company faces and why it needs a change of strategy. An operating profit of only €341,000 on significant sales volumes and after years of investment should give shareholders cause for concern. Our Offer represents the only certainty for shareholders at a time when both EcoSecurities and the carbon markets face significant uncertainty."
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Enquiries: |
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Guanabara B.V. |
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Dr Pedro Moura Costa |
Tel: +44 77 1116 1149 |
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Dresdner Kleinwort Limited: Financial Adviser to Guanabara |
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Marc Monasch |
Tel: +44 207 475 5385 |
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Noble & Company: Corporate Broker to Guanabara Peter Tracey |
Tel: +44 207 763 2314 |
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James Staveley |
Tel: +44 207 763 2317 |
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Maitland: PR adviser to Guanabara |
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Neil Bennett |
Tel: +44 207 379 5151 |
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Rowan Brown |
Tel: +44 207 379 5151 |
Dresdner Kleinwort Limited, which is authorised by the Financial Services Authority, is acting as sole financial adviser to Guanabara and no one else in connection with the Cash Offer and will not be responsible to anyone other than Guanabara for providing the protections afforded to clients of Dresdner Kleinwort Limited, or for affording advice in relation to the transaction or any other matter referred to herein.
Noble & Company, which is authorised and regulated by the Financial Services Authority, is acting as corporate broker to Guanabara and no one else in connection with the Cash Offer and will not be responsible to anyone other than Guanabara for providing the protections afforded to clients of Noble & Company or for affording advice in relation to the transaction or any other matter referred to herein.
Terms defined in the Offer Document issued on 22 July 2009 have the same meaning in this announcement unless otherwise stated.
The availability of the Cash Offer to persons outside Ireland may be affected by the laws of the relevant jurisdiction. Such persons should inform themselves about and observe any applicable requirements. The Cash Offer will not be made, directly or indirectly, in or into Australia, Canada, Japan, South Africa or any other jurisdiction where it would be unlawful to do so, or by use of the mails, or by any means or instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce, or by any facility of a national securities exchange of any jurisdiction where it would be unlawful to do so, and the Cash Offer will not be capable of acceptance by any such means, instrumentality or facility from or within Australia, Canada, Japan, South Africa or any other jurisdiction where it would be unlawful to do so. Accordingly, copies of this announcement and all other documents relating to the Cash Offer are not being, and must both not be, mailed or otherwise forwarded, distributed or sent in, into or from Australia, Canada, Japan, South Africa or any other jurisdiction where it would be unlawful to do so. Persons receiving such documents (including, without limitation, nominees, trustees and custodians) should observe these restrictions. Failure to do so may invalidate any related purported acceptance of the Cash Offer. Notwithstanding the foregoing restrictions, Guanabara reserves the right to permit the Cash Offer to be accepted if, in its sole discretion, it is satisfied that the transaction in question is exempt from or not subject to the legislation or regulation giving rise to the restrictions in question.
This announcement has been prepared for the purposes of complying with Irish law, the rules of the AIM and the Takeover Rules and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of Ireland.
This announcement does not constitute an offer to sell or an invitation to purchase or subscribe for any securities or the solicitation of an offer to purchase or subscribe for any securities. Any response in relation to the Cash Offer should be made only on the basis of the information contained in the Offer Document or any document by which the Cash Offer is made.
The directors of Guanabara accept responsibility for all the information contained in this announcement, save that the only responsibility accepted by them in respect of information in this announcement relating to the EcoSecurities Group which has been compiled from public sources is to ensure that such information has been correctly and fairly reproduced and presented. Subject as aforesaid, to the best of the knowledge and belief of the directors of Guanabara (who have taken all reasonable care to ensure that such is the case), the information in this announcement for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.
Any person who is the holder of 1 per cent or more of any class of shares in EcoSecurities or Guanabara may be required to make disclosures pursuant to Rule 8.3 of the Takeover Rules with effect from 5 June 2009, the date of the announcement which commenced the offer period in respect of the Cash Offer.
Appendix I
Presentation of Information, Bases and Sources
A. Third Party Sources
Guanabara confirms that the information in this document obtained from third party sources has been correctly and fairly reproduced. So far as Guanabara is aware and has been able to ascertain from information published from such third parties, no facts have been omitted which would render the reproduced information inaccurate or misleading. Guanabara does not have access to the facts and assumptions underlying the data extracted from publicly available sources. As a result, Guanabara is unable to verify such.
B. Throughout the Document (except where otherwise specified)
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(1) |
The financial information relating to EcoSecurities has been extracted or derived (without any adjustments) from annual reports and accounts of EcoSecurities for the relevant periods and other information made publicly available by Ecosecurities, including the Interim Results and Response Circular dated 4 August 2009; and |
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(2) |
Information regarding the Guanabara Offer is sourced from the Offer Document and other material made publicly available by Guanabara. |
C. Rounding
Values stated throughout the document have been subjected to rounding and are given to the stated number of decimal places. As a result of this rounding, the totals of values presented in this document may vary slightly from the actual arithmetic totals of such values.
D. References
The relevant bases of calculation and sources of information are provided below in the order in which such information appears in this document. Where such information is repeated in this document, the underlying bases and sources are not.
The reference to another reduction in the contracted portfolio of EcoSecurities following a reduction in 2008 is sourced from the published annual report of EcoSecurities and the Interim results as detailed below:
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(a) |
According to the 2008 Annual Report, the contracted CER Portfolio as at the 31 December 2008 was 144 million tonnes (page 10); and
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(b) |
According to the Interim Results, the contracted CER Portfolio as at the 30 June 2009 was 124 million tonnes (page 2). |
The reference to a significant reduction in the growth rate of expected CER volumes from the Company's registered projects is sourced from the following:
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The reference to €1.06m profit before tax is sourced from the Interim Results (page 12).
The reference to the contribution of net finance income of €0.72m to the Company's profit before tax is sourced from the Interim Results (page 12).
The reference to operating profit of €0.34 m is sourced from the Interim Results (page 12).
The reference to sales of €60.0 is sourced from the Interim Results (page 1).
The reference to the acceleration of deliveries of forward sales above the previously planned level is sourced from the Interim Results (page 7).
The reference to the Company's substantial trading activity and the relevant number of CERs is sourced from the Interim Results (page 7).
The reference to the reduction in the Company's inventory and to the relevant numbers of CERs is sourced from the Interim Results (page 8)
The reference to EcoSecurities not providing any guidance as to profitability in the full financial year and beyond is based on the absence of such statement either in the Interim Results or the Response Circular dated 4 August 2009.
The reference to market uncertainties is sourced from the article "Pressure mounts as UN negotiators resume talks" published on 7 August 2009 by Point Carbon on http://www.pointcarbon.com and, among other sources, from the other articles mentioned below with respect to recent press coverage.
The reference to the recent reduction in pre-2013 CER forecasts by Unep Risoe is sourced from an article entitled ""UN revises down CER Forecast" from the publication Carbon Market Daily, Volume 5, Issue 155 published on 10 August 2009 (page 3) by Point Carbon.
The references to write-downs in the contracted portfolio of EcoSecurities' peer group and to the relevant figures are based on:
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Tricorona AB's Interim Report dated 23 July 2009 for the six months to 30 June 2009 (page 8);
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Camco International Limited's Trading Update published on 6 August 2009; and
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Trading Emissions plc's Trading Statement published on 11 August 2009. |
The reference to recent press coverage is sourced from the following articles:
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"Pressure mounts as UN negotiators resume talks" published on 7 August 2009 by Point Carbon on http://www.pointcarbon.com;
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"Big oil pumps up the cash amid US climate debate" published on 31 July 2009 by Point Carbon on http://www.pointcarbon.com;
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(c) |
"Ban Ki-moon warns of catastrophe without world deal on climate change" published on 10 August 2009 by the Daily Telegraph on http://www.telegraph.co.uk; and
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(d) |
"Time 'runs short' on climate deal" published on 10 August 2009 by the BBC on http://news.bbc.co.uk |
The reference to parties which have given irrevocable undertakings not to accept Guanabara's Offer and their connection with the Company and its current management is sourced from the Response Circular dated 4 August 2009 and the list of the companies' directors as published on the Company's website (www.ecosecurities.com) on the date of publication of this document.
Details of the Offer price, premium and Volume Weighted Average Trading Price are extracted from the Offer Document (pages 3 and 4).
Appendix II
Documents Available for Inspection
In addition to copies of the documents listed as available for inspection in the Offer Document and in the Guanabara letter to EcoSecurities Shareholders dated 22 July 2009, a copy of this document will be available for inspection at the offices of A&L Goodbody, IFSC, North Wall Quay, Dublin 1 during normal business hours on any weekday (Saturday, Sunday and public holidays excepted) whilst the Cash Offer remains open for acceptance.
Related Shares:
Eco (atlantic)