Tilt offer won't be increased - Infratil, Mercury

Tuesday 9th October 2018

Infratil and Mercury NZ say their offer for Tilt Renewables is attractive given the increased regulatory risk in the sector and will not be increased.

The companies today extended the deadline for the offer by two weeks to Oct. 29. Infratil is offering $2.30 a share for the 22 percent of Tilt the pair do not already own. That price is "final and will not be increased."

The pair say the offer is fair compensation for the value of Tilt’s existing business and its development pipeline, including the 336 MW Dundonnell wind project it is close to proceeding with.

They don’t believe the shares will trade within the $2.45 to $3.01 value range independently assessed by Northington Partners any time soon. Should the offer not reach the 90 percent threshold for compulsory acquisition the stock is likely to fall below $2.30, they said.

Also, shareholders not planning to participate in the planned A$280 million capital raising for Dundonnell risk having their holdings diluted.

Infratil said investors should consider whether they are comfortable with the change in Tilt’s risk profile as it starts developing large-scale projects during a period of regulatory uncertainty.

“There is significant increased political and regulatory pressure in the Australian renewable energy sector at this time, creating uncertainty over Tilt Renewables' outlook and value and the broader prospects for the renewable energy industry.

“Infratil is an experienced investor with strong insight into the renewable energy sector and is not prepared to pay a significant additional premium for Tilt Renewables given the uncertainty and strong evidence of comparable market pricing for similar assets.”

Tilt shares recently traded unchanged at $2.30, down about 1.7 percent this month.

Investors holding about 2.6 million Tilt shares – less than 1 percent of the company – have so far accepted the offer.

Yesterday Tilt’s independent directors again urged shareholders to reject the offer.

A commitment by the Victorian state government to buy 37 percent of Dundonnell’s output for 15 years was worth about 22 cents a share, the directors said, citing Northington’s assessment. That was secured after the offer opened.

Tilt is planning to meet half the cost of the A$560 million project through a renounceable rights offer. The directors say any unexercised rights will be sold to other investors through a shortfall book-build.

While there is no guarantee as to price the rights will achieve, the scheme is intended to ensure that shareholders not subscribing for new shares are not made worse off by that decision, they said.

(BusinessDesk)

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