UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO.
2
TO
SCHEDULE
14D-9
(Rule
14d-101)
Solicitation/Recommendation Statement
Under Section 14(d)(4) of the Securities Exchange Act of 1934
ENERNOC, INC.
(Name of
Subject Company)
ENERNOC, INC.
(Name of
Person Filing Statement)
Common Stock, par value $0.001 per share
(Title of Class of Securities)
292764107
(CUSIP Number
of Class of Securities)
Timothy Healy
Chief Executive Officer
One Marina Park Drive, Suite 400
Boston, Massachusetts 02210
(617)
224-9900
(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications
on Behalf of the Person Filing Statement)
With copies to:
Miguel J. Vega, Esq.
Barbara L. Borden, Esq.
Cooley LLP
500 Boylston
Street
14
th
Floor
Boston, MA 02116
(617) 937-2300
☐
|
Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
|
This Amendment No. 2 (this Amendment) to Schedule
14D-9
amends and supplements the Solicitation/Recommendation Statement on Schedule
14D-9
(as amended or supplemented from time to time, the Schedule
14D-9),
initially filed by EnerNOC, Inc., a Delaware corporation (EnerNOC), with the Securities and Exchange Commission (the SEC) on July 10, 2017, as amended on July 19,
2017, relating to the tender offer by Pine Merger Sub, Inc., a Delaware corporation (Purchaser) and a wholly-owned subsidiary of Enel Green Power North America, Inc., a Delaware corporation (Parent), to purchase all of the
outstanding shares of EnerNOCs Common Stock (the Shares) at a purchase price of $7.67 per Share, in cash, without interest and less any applicable withholding taxes or other taxes, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated July 10, 2017 (as it may be amended or supplemented from time to time, the Offer to Purchase), and the related Letter of Transmittal (as it may be amended or supplemented from time to time, the
Letter of Transmittal and, together with the Offer to Purchase, the Offer).
Except as otherwise set forth below,
the information set forth in the Schedule
14D-9
remains unchanged and is incorporated by reference as relevant to the items in this Amendment. Capitalized terms used and not defined herein have the meanings
assigned to such terms in the Schedule
14D-9.
This Amendment is being filed to reflect certain updates as reflected below.
Explanatory Note:
As further described
in Item 8 of the Schedule
14D-9
under the heading Legal Proceedings below, the Company is providing certain additional disclosures that are supplemental to those contained in the Schedule
14D-9.
This supplemental information should be read in conjunction with the Schedule
14D-9,
which we urge you to read in its entirety. With respect to the Stockholder
Litigation (defined below), the defendants deny that any further disclosure was required under any applicable rule, statute, regulation or law. As noted below, none of the defendants has admitted wrongdoing of any kind, including but not limited to
inadequacies in any disclosure, the materiality of any disclosure that the plaintiffs contend should have been made, or any violation of any federal or state law. The additional disclosures are set forth below:
Item 3. Past Contacts, Transactions, Negotiations and Agreements.
The information set forth in Item 3.
Past Contacts, Transactions, Negotiations and AgreementsPotential for Future
Arrangements
on page 10 of the Schedule
14D-9
is hereby replaced in its entirety with the following:
To our knowledge, except for certain agreements described in this Schedule
14D-9
(or in the
documents incorporated by reference herein) between EnerNOC and our executive officers and directors, no employment, equity contribution or other agreement, arrangement or understanding between any executive officer or director of EnerNOC, on the
one hand, and Parent, Purchaser, any of their affiliates or EnerNOC, on the other hand, existed as of July 25, 2017, and neither the Offer nor the Merger is conditioned upon any executive officer or director of EnerNOC entering into any such
agreement, arrangement or understanding. Since June 21, 2017, certain members of our senior management team have had discussions with Parent and/or Enel regarding planned integration of business functions post-closing.
Although such arrangements have not, to our knowledge, been entered into as of July 25, 2017, it is possible that members of our current
management team will enter into new employment or consulting arrangements with the Surviving Corporation. Such arrangements may include the right to purchase or participate in the equity of Purchaser or its affiliates. Any such arrangements with the
existing management team are currently expected to be entered into after the completion of the Offer and will not become effective until after the Merger is completed, if at all. There can be no assurance that the applicable parties will reach an
agreement on any terms, or at all.
Item 4. The Solicitation or Recommendation.
The information set forth in Item 4 of the Schedule
14D-9
is hereby amended and supplemented by:
(a)
|
Replacing the fifth full paragraph appearing on page 15 under
Background of Offer and Merger
with the following:
|
During the strategic review process from December 1, 2016 to June 20, 2017, our
senior management and representatives from Morgan Stanley, acting at the direction of our Board of Directors, had preliminary
in-person
and telephonic discussions with approximately 39 financial sponsors and
19 potential strategic acquirers, including Parent, with respect to the sale of the entire Company. Of those parties, 10 financial sponsors and six potential strategic acquirers approached our management and/or representatives of Morgan Stanley on
an unsolicited basis. With respect to the potential sale of the entire Company, we entered into
non-disclosure
agreements with a total of 27 counterparties, including Enel, and held management presentations
with 21 parties, including Parent. Each of the 27
non-disclosure
agreements signed with counterparties in connection with a potential sale of the entire Company contained a customary standstill provision with
a
carve-out
expressly permitting private communications and offers to be made to our Board of Directors, our senior management or our financial advisors.
(b)
|
Replacing the second full paragraph appearing on page 17 under
Background of Offer and Merger
with the following:
|
Between January 23, 2017 and April 4, 2017, representatives of EnerNOC and/or Greentech Capital had discussions with seven
potential strategic acquirers, including Party A, and four financial sponsors, including Party C and Party D, of our Subscription-based Software and Procurement Businesses, and entered into
non-disclosure
agreements and conducted management presentations and diligence sessions with nine of these parties. Of the nine
non-disclosure
agreements signed with counterparties in connection with a potential acquisition
of our Subscription-based Software and Procurement Businesses, three contained no standstill provision and the remaining six contained a customary standstill provision with a
carve-out
expressly permitting
private communications and offers to be made to our Board of Directors, our senior management or our financial advisors.
(c)
|
Replacing the first paragraph appearing on page 20 under
Background of Offer and Merger
with the following:
|
On April 4, 2017, we received a
non-binding
indicative offer from Party C for the proposed
acquisition of 100% of the equity interests of EnerNOC for $7.15 per share. We also received a
non-binding
indicative offer from Party E for a minority cash investment of
$15-$30M
contingent upon the formation of a larger syndicate. The indicative offer from Party E did not include a valuation for the Company.
(d)
|
Replacing the fifth paragraph appearing on page 20 under
Background of Offer and Merger
with the following:
|
On April 7, 2017, we received indicative offers from Party I, a potential strategic acquirer, and Party J, a financial sponsor, each
for the proposed acquisition of 100% of the equity interests of EnerNOC. Due to the different forms of the bids, representatives of Morgan Stanley obtained clarification for our Board of Directors on each bid to enable a
like-for-like
comparison based on our fully diluted equity. Overall, the bids received for the purchase of the entire Company ranged from $6.25 to $7.69 per share, with
Parents bid being made at an aggregate equity price of $235 million, or $7.23 per fully diluted share, Party Is bid being made at $7.69 per share and Party Js bid being made at $6.95 per share.
(e)
|
Replacing the fourth full paragraph appearing on page 21 under
Background of Offer and Merger
with the following:
|
On April 19, 2017, the Committee held a telephonic meeting with Messrs. Healy, Sorenson, Leaver and Berdik, as well as
representatives from Morgan Stanley and Cooley, in which Morgan Stanley provided the Committee with an update regarding its April 13
th
telephonic conversations with Party I and Party J. The
Committee discussed Party Is initial bid, as well as Party Is position as a significant competitor of the Company, recent restructurings, dispute with its bondholders, dispositions, management turnover, stockholder activism and other
factors that raised legitimate concerns regarding deal certainty related to Party I. Following discussion, the Committee determined that Party I could move forward into Phase II. The Committee also discussed a revised indicative bid from Party J
reflecting an increased price of $7.35 per share for the proposed acquisition of 100% of the equity interests of EnerNOC. Following discussion, the Committee determined that Party J could also move into Phase II. Morgan Stanley and the Committee
discussed the four indicative offers received to date from bidders that proceeded into Phase II (i.e., Parent, Party C, Party I and Party J). The same day, Morgan Stanley, as instructed by the Committee, distributed an initial draft of the Merger
Agreement to Party C, Party I and Party J.
(f)
|
Replacing the last paragraph appearing on page 24 under
Background of Offer and Merger
with the following:
|
Between June 2, 2017 and June 16, 2017, members of our senior management provided representatives of Party L with a management
presentation and further discussed the proposed acquisition of 100% of the equity interests of EnerNOC. During this period, Party L conducted limited due diligence and did not submit an indicative offer.
(g)
|
Replacing the fourth paragraph appearing on page 25 under
Background of Offer and Merger
with the following:
|
Also on June 5, 2016, our Board of Directors held a telephonic meeting with Messrs. Sorenson and Berdik, as well as representatives
of Morgan Stanley and Cooley. Representatives of Cooley and Mr. Berdik provided a review of Parents material comments to the draft Merger Agreement, including a discussion on Parents proposed minimum condition threshold for the
tender offer and the proposed net working capital offering condition. Our Board of Directors discussed the status of Party L and determined that Party L would require significant additional time to conduct due diligence prior to being able to
determine whether it could submit an offer to acquire the entire Company, which would have added significant delay to the final stages of the strategic review process. Such anticipated delay, and our inability to determine whether Party L would be
able to submit an attractive offer, led our Board of Directors to conclude that the proposed transaction with Parent should be pursued without additional delay in order to eliminate the risk that Parent would withdraw its proposal.
(h)
|
Adding the following paragraph after the seventh paragraph appearing on page 25 under
Background of Offer and Merger
:
|
Also on June 8, 2017, our Board of Directors held a telephonic meeting with Messrs. Sorenson and Berdik, as well as representatives
of Morgan Stanley and Cooley. Representatives of Cooley and Mr. Berdik provided an update of discussions with Parent regarding the draft Merger Agreement, including discussions of the minimum condition threshold for the tender offer, the
proposed net working capital offering condition, treatment of the convertible debt,
pre-closing
restrictive covenants and termination rights.
(i)
|
Replacing the table appearing on page 33 under
Certain Financial ProjectionsUpside Projections
with the following:
|
Upside Projections
(Dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
Total Revenue
|
|
$
|
345
|
|
|
$
|
476
|
|
|
$
|
469
|
|
|
$
|
529
|
|
|
$
|
738
|
|
Demand Response Revenue
|
|
|
284
|
|
|
|
410
|
|
|
|
377
|
|
|
|
397
|
|
|
|
552
|
|
Software Revenue
|
|
|
61
|
|
|
|
66
|
|
|
|
92
|
|
|
|
132
|
|
|
|
186
|
|
Operating Expenses
|
|
|
166
|
|
|
|
161
|
|
|
|
171
|
|
|
|
187
|
|
|
|
204
|
|
Income (Loss) from Operations
|
|
|
(41
|
)
|
|
|
3
|
|
|
|
(12
|
)
|
|
|
13
|
|
|
|
90
|
|
Total Adjusted EBITDA
|
|
|
(1
|
)
|
|
|
40
|
|
|
|
19
|
|
|
|
42
|
|
|
|
118
|
|
Demand Response Adjusted EBITDA
|
|
|
37
|
|
|
|
69
|
|
|
|
39
|
|
|
|
40
|
|
|
|
74
|
|
Software Adjusted EBITDA
|
|
|
(19
|
)
|
|
|
(12
|
)
|
|
|
(3
|
)
|
|
|
19
|
|
|
|
61
|
|
Corporate Adjusted EBITDA
|
|
|
(19
|
)
|
|
|
(17
|
)
|
|
|
(17
|
)
|
|
|
(17
|
)
|
|
|
(17
|
)
|
Free Cash Flow
|
|
|
13
|
|
|
|
39
|
|
|
|
12
|
|
|
|
43
|
|
|
|
94
|
|
Unlevered Free Cash Flow
|
|
|
2
|
|
|
|
25
|
|
|
|
2
|
|
|
|
28
|
|
|
|
52
|
|
(j)
|
Replacing the table appearing on page 34 under
Certain Financial ProjectionsUpside Projections:
Non-GAAP
Reconciliation
with the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Upside Projections:
Non-GAAP Reconciliation
(Dollars
in
Millions)
|
|
|
|
2017E
|
|
|
2018E
|
|
|
2019E
|
|
|
2020E
|
|
|
2021E
|
|
Projected Income (Loss) from Operations
|
|
($
|
41
|
)
|
|
$
|
3
|
|
|
($
|
12
|
)
|
|
$
|
13
|
|
|
$
|
90
|
|
Reconciling Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, Amortization and Asset Impairments
|
|
|
29
|
|
|
|
24
|
|
|
|
21
|
|
|
|
19
|
|
|
|
18
|
|
Stock-Based Compensation
|
|
|
11
|
|
|
|
13
|
|
|
|
10
|
|
|
|
10
|
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Adjusted EBITDA
|
|
($
|
1
|
)
|
|
$
|
40
|
|
|
$
|
19
|
|
|
$
|
42
|
|
|
$
|
118
|
|
Capital Expenses
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
(11
|
)
|
|
|
(13
|
)
|
|
|
(12
|
)
|
Change in Working Capital
|
|
|
25
|
|
|
|
10
|
|
|
|
4
|
|
|
|
14
|
|
|
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
$
|
13
|
|
|
$
|
39
|
|
|
$
|
12
|
|
|
$
|
43
|
|
|
$
|
94
|
|
(Stock-Based Compensation)
|
|
|
(11
|
)
|
|
|
(13
|
)
|
|
|
(10
|
)
|
|
|
(10
|
)
|
|
|
(10
|
)
|
Taxes
1
|
|
|
0
|
|
|
|
(1
|
)
|
|
|
0
|
|
|
|
(5
|
)
|
|
|
(32
|
)
|
Unlevered Free Cash Flow
|
|
$
|
2
|
|
|
$
|
25
|
|
|
$
|
2
|
|
|
$
|
28
|
|
|
$
|
52
|
|
(k)
|
Replacing the first full paragraph appearing on page 38 under
Sum-of-the-Parts
Trading
Multiples Analysis
with the following:
|
To obtain the value of the Companys Subscription-based Software
and Procurement Businesses, Morgan Stanley used its professional judgment and expertise to derive various multiples for a software division with the financial and growth characteristics (historical and projected) exhibited by the Subscription-based
Software and Procurement Businesses. Based on this criteria, Morgan Stanley valued the Subscription-based Software and Procurement Businesses using a 1.5x to 2.5x multiple of the Companys estimated Subscription-based Software and Procurement
Businesses revenue for the fiscal year 2018 of $65 million consistent with Morgan Stanleys judgment as to valuation methodologies typically used for early stage software businesses.
(l)
|
Replacing the first three paragraphs under
Precedent Premiums Paid
on page 39 with the following:
|
Morgan Stanley performed a precedent premiums paid analysis, which is designed to imply a value of a company based on
publicly available premiums of selected transactions. Morgan Stanley compared publicly available statistics for selected transactions occurring between January 1, 2012 and March 31, 2017, and involving all cash consideration and target
companies that are public companies worldwide, but excluding terminated transactions, transactions involving companies owned by employee stock ownership plans, self-tenders, spin-offs, share repurchases, minority interest transactions, exchange
offers, recapitalizations and restructurings. The 1,133 selected transactions occurring between January 1, 2012 and March 31, 2017 had an average premium of 37%.
For the transactions analyzed, Morgan Stanley noted the distributions of the implied premium to the acquired companys
30-trading-day
average closing share price prior to announcement (or the last
30-trading-day
average closing share price prior to the
share price being affected by acquisition rumors or similar merger-related news).
Based on its analysis of the relevant
metrics and time frame for each of the transactions described above and upon the application of its professional judgment and experience, Morgan Stanley selected a representative range of implied premiums of the transactions described above that
centered on the 37% average from the selected transactions, and calculated the implied value per Share based on the
30-trading-day
average closing price of the Shares as
of March 13, 2017, which was the last trading day preceding EnerNOCs public announcement that it was conducting a review of strategic alternatives (the Unaffected Date). The following table summarizes Morgan Stanleys
analysis:
(m)
|
Replacing the last paragraph appearing on page 41 under
General
with the following:
|
In the two years prior to the date of the opinion, Morgan Stanley and its affiliates have provided financial advisory and financing
services to Enel and have received approximately $7.0 million in aggregate fees in connection with such services. In addition, Morgan Stanley or an affiliate thereof is currently a lender to Enel under a
pre-existing
credit facility. Any customary commitment fees received by Morgan Stanley under the credit facility in the two years prior to the date of the opinion are included in the $7.0 million
aggregate fees referenced above. Morgan Stanley may also receive interest income on the drawn amount under such credit facility. As of the date of the opinion, Morgan Stanley has been engaged with regard to two financial advisory assignments for
Enel which are unrelated to the Merger and may receive customary fees if the transactions that are the subject matter of those assignments are completed, which fees would in the aggregate be materially less than the aggregate fees received by Morgan
Stanley from Enel in the two years prior to the date of the opinion. Morgan Stanley may also seek to provide financial advisory and financing services to Enel and the Company and their respective affiliates in the future and would expect to receive
fees for the rendering of these services.
Item 8. Additional Information.
The information set forth in Item 8.
Additional InformationLegal Proceedings
on page 48 of the Schedule
14D-9
is hereby replaced in its entirety with the following:
Between July 14, 2017 and
July 18, 2017, three putative class action lawsuits were filed on behalf of the public stockholders of EnerNOC (captioned
Basch v. EnerNOC, Inc., et al.
, No.
1:17-cv-11305;
Nelson v. EnerNOC, Inc., et al.
, No.
1:17-cv-11324;
and
Berg v.
EnerNOC, Inc. et al.,
No.
1-17-cv-11331)
in the United States District Court for the District of Massachusetts against
EnerNOC, the members of the Board of Directors and, in one case, Parent, Purchaser and Enel (collectively, the Stockholder Litigation). The complaints generally allege that EnerNOC and the members of the Board of Directors violated
Section 14 of the Exchange Act by issuing a Schedule
14D-9
that was materially misleading and omitted material facts related to the Transactions. The complaints also allege that the members of the Board
of Directors and also, in one case, Parent, Purchaser and Enel, violated Section 20(a) of the Exchange Act, as controlling persons who had the ability to prevent the Schedule
14D-9
from being materially
false and misleading. The complaints seek, among other things, an injunction against the consummation of the proposed Transactions, an award of damages, and an award of costs and disbursements for the actions, including reasonable attorneys
and experts fees. On July 17, 2017, the plaintiff in
Basch v. EnerNOC
also filed a motion for preliminary injunction seeking to enjoin consummation of the Offer until such time as corrective disclosures are made. The defendants
believe that the allegations in the complaints lack merit.
In response to the Stockholder Litigation, we are hereby disclosing certain
additional information (the Supplemental Disclosures) solely for the purpose of mooting plaintiffs claims and avoiding the risk of the Stockholder Litigation delaying or adversely affecting the Transactions. The defendants deny the
allegations in the complaints and believe that no additional disclosures are required under applicable laws. The Supplemental Disclosures should be read in conjunction with the Schedule
14D-9,
which we urge
you to read in its entirety. The defendants have denied, and continue to deny, that they have committed or assisted others in committing any violations of law, and expressly maintain that, to the extent applicable, they have complied with their
legal duties. We believe that the Schedule
14D-9
disclosed all material information, and nothing in the Supplemental Disclosures should be deemed an admission of the legal necessity or materiality of the
information disclosed.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and
correct.
|
|
|
ENERNOC, INC.
|
|
|
By:
|
|
/s/ William Sorenson
|
Name:
|
|
William Sorenson
|
Title:
|
|
Chief Financial Officer
|
Dated: July 25, 2017
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