TIDMWIND
RNS Number : 1181N
Renewable Energy Generation Ltd
14 May 2015
Renewable Energy Generation Limited
Indicative Terms of proposed Zero Dividend Preference Share
Issue
and Publication of Shareholder Circular and EGM Notice
14 May 2015
Renewable Energy Generation Limited (the "Company") announced on
10 March 2015 that it was considering an issue of zero dividend
preference shares ("ZDP Shares") as a financing option to augment
its existing cash resources alongside non-recourse project finance.
The Board, having further considered the proposed ZDP Share issue,
is today announcing key indicative terms of the proposed Issue and
the publication of a Shareholder Circular and EGM notice.
Key Indicative Terms of Zero Dividend Preference Shares ("ZDP
Shares") Issue
The Company is proposing the following key indicative terms in
relation to the ZDP Shares:
-- ZDP Shares to be issued at 100 pence per
ZDP Share to raise gross proceeds not exceeding
GBP31 million;
-- Gross Redemption Yield of approximately
4.0 per cent;
-- ZDP Share life of approximately six years
(to 30 June 2021);
-- The Company will make an application for
the ZDP Shares to be admitted to a Standard
Listing on the Official List and to trading
on the London Stock Exchange.
Full details of the proposed indicative terms attaching to the
proposed ZDP Shares are set out in the Shareholder Circular
referred to below.
The Company will use the net proceeds of the Issue to support
the procurement and construction phases of projects within its wind
portfolio. The Board believes that obtaining additional finance
through the issue of ZDP Shares, will allow the Company to
accelerate the delivery of projects under the Renewables Obligation
and Feed-in Tariff regimes and hence maximise value for
shareholders.
Publication of Shareholder Circular and EGM Notice
The Company has today published a shareholder circular in
connection with the proposed ZDP Share Issue. The Company is
required to seek certain shareholder consents, including
shareholder approval of certain changes to the Company's articles
of association in order to incorporate the rights which will be
attached to the ZDP Shares.
The EGM will take place at Elizabeth House, 9 Castle Street, St
Helier, Jersey, Channel Islands JE2 3RT at 11.30 am on 08 June
2015.
A copy of the Shareholder Circular and EGM Notice is available
on the Company's website at www.renewableenergygeneration.co.uk
Capitalised terms used but not defined in this announcement
shall, unless the context requires otherwise, have the same meaning
as in the Shareholder Circular.
Expected timetable
Latest time and date for receipt 11.30 a.m. on 6
of Forms of Proxy June 2015
Extraordinary General Meeting 11.30 a.m. on 8
June 2015
Publication of the Prospectus 9 June 2015
Offer for Subscription closes 11.00 a.m. on 17
June 2015
Placing closes 3.00 p.m. on 17
June 2015
Admission and dealings in the 8.00 a.m. on 24
ZDP Shares commences June 2015
Enquiries:
Renewable Energy Generation Limited +44 (0)1483 901 796
Andrew Whalley, Chief Executive Officer
David Crockford, Finance Director
Ian Lawrence, Communications Manager
Cenkos (Placing Agent and Financial Adviser) +44 (0)20 7397
8900
Sapna Shah
Phil Higgs
Smith & Williamson Corporate Finance Limited +44 (0)117 376
2213
(Nominated Adviser)
Martyn Fraser
Broker Profile +44 (0)20 7448 3244
Simon Courtenay
Harry Rippon
Notes to editors
Renewable Energy Generation Ltd (REG) is an AIM quoted renewable
energy group. Its main business is the development, construction
and operation of wind farms and generating power from refined used
cooking oil.
REG Windpower: based in Truro, Bath and Guildford, UK, it
currently operates 11 wind projects in Cambridgeshire, Cornwall,
County Durham, Yorkshire, Lancashire, Cumbria and Gwynedd, with a
total capacity of 34.7MW as well as 5 projects on behalf of
BlackRock totalling 46MW. REG has around 200MW of projects in the
planning system awaiting consent.
REG Bio-Power UK Ltd: based in Nottingham, UK: it operates 26MW
of electricity generation plant powered by fuel recovered from used
cooking oil.
Headquartered in Jersey, REG was admitted to trading on AIM, a
market operated by the London Stock Exchange, in May 2005 (AIM:
WIND).
This announcement is an advertisement and does not constitute a
prospectus relating to the Company and does not constitute, or form
part of, any offer or invitation to sell or issue, or any
solicitation of any offer to purchase or subscribe for, any shares
in the Company in any jurisdiction nor shall it, or any part of it,
or the fact of its distribution, form the basis of, or be relied on
in connection with or act as any inducement to enter into, any
contract therefor. Investors should not purchase or subscribe for
any transferable securities referred to in this announcement except
on the basis of information contained in the prospectus (the
"Prospectus") intended to be published by the Company in due course
in connection with the proposed admission of its ZDP Shares to the
standard listing segment of the Official List of the UK Listing
Authority and to trading on the London Stock Exchange plc's main
market for listed securities. Copies of the Prospectus, once
published, will be available from the Company's registered office
and on the Company's website.
The Chairman's letter in respect of the proposals, as contained
in the Circular, is set out below.
"Dear Shareholder
Proposed issue of ZDP Shares, authority to make market purchases
of ZDP Shares, increase to the authorised share capital of the
Company and adoption of new articles of association
1 INTRODUCTION
The Board announced on 10 March 2015 that it was considering an
issue of zero dividend redeemable preference shares to, inter alia,
provide finance to expedite the construction of projects in the
Company's wind energy portfolio.
The Board is proposing to raise up to GBP31 million (before
expenses) by way of a placing and offer for subscription of ZDP
Shares (the "Issue").
The purpose of this letter is to explain the Board's proposals
which include: (i) granting the Directors authority to issue up to
31 million ZDP Shares; (ii) increasing the authorised share capital
of the Company to provide for the ZDP Shares; (iii) granting the
Directors authority to issue an additional 10 per cent. of the
total issued ZDP Share capital following the Issue; (iv) adopting
new articles of association incorporating the rights attaching to
the ZDP Shares and certain other amendments; and (v) granting the
Directors authority to make market purchases of up to 14.99 per
cent. of the ZDP Shares in issue following conclusion of the Issue
(together the "Proposals").
The Proposals are conditional on the approval of Shareholders at
the Extraordinary General Meeting.
2 BACKGROUND TO THE PROPOSALS
The Company aims to provide its investors with a diversified
exposure to the growth of renewable energy within the overall
energy market. This is achieved through in-house development of new
renewable projects, including small onshore wind energy projects.
The purpose of the Issue will be to increase the capital available
to the Company in order to expedite construction of projects within
its wind portfolio so that they can be delivered under the
Renewables Obligation regime (RO) before it closes in March 2017
or, in the case of certain smaller projects, the Feed-in Tariff
regime (FIT) before the FIT payments are subject to further
degression (see further below).
The RO is currently the main support mechanism for renewable
electricity projects in the UK. The RO came into effect in 2002 in
England, Wales and Scotland, followed by Northern Ireland in 2005.
It places an obligation on suppliers to source a growing proportion
of the electricity they supply from eligible renewable sources.
Renewable Obligation Certificates (ROCs) are certificates issued to
operators of accredited renewable generating stations, such as the
Company, for the eligible renewable electricity they generate. ROCs
are traded with UK electricity suppliers to allow them to
demonstrate that they have met their obligations under the RO.
Where suppliers do not present a sufficient number of ROCs to meet
their obligation, they must pay a 'buy-out' price to a 'buy-out'
fund.
The RO will close to accreditation for new projects on 31 March
2017 and will be replaced by a new support scheme based on
contracts for difference feed-in-tariffs (CFD FITs) introduced
under EMR. Existing renewable energy projects accredited under the
RO on or before 31 March 2017 will continue to receive support
under the RO (for 20 years from the date of accreditation).
The Board believes that there will be a significant benefit to
Shareholders in ensuring as many of its renewable energy projects
as possible benefit from the current RO regime as the Board
currently anticipates that the RO regime should be of greater
economic benefit to the Group than the new CFD FIT regime
introduced under EMR. In addition, the Board believes that the
certainty of support offered under the RO is beneficial to
Shareholders when compared with the CFD FIT regime where wind and
solar PV projects will have to compete for a CFD FIT in annual
allocation rounds.
The FIT regime supports renewable energy generation sites with a
capacity of less than 5MW and it requires certain licensed
electricity suppliers to pay a generation and export tariff to
eligible low carbon generators whose capacity does not exceed 5MW.
FIT payments are made according to published tariffs. The tariff
made available to generators is subject to degression. That is, the
tariff level available for new generators will decrease annually.
The price for individual renewable energy generating projects is
fixed once the project becomes operational. Accordingly, the Board
believes that for certain of its smaller wind projects accelerating
the construction of those projects will enable them to benefit from
higher FIT payments, before further degression of the tariff.
Use of proceeds
The Company will use the net proceeds of the Issue to support
the procurement and construction phases of projects within its wind
portfolio. At any one time, the Company will have a number of wind
projects that have reached the procurement and/or the construction
phase. The net proceeds of the Issue may be used for any one or
more of these projects.
As at the date of this letter, the Group has a portfolio of
around 42 MW in procurement or construction to be generated by 20
turbines across 6 sites for which planning consent has been
received.
As at the date of this letter, the following projects are in the
procurement and construction phases of the Group's wind
program:
Site Location Anticipated Anticipated Anticipated
No. of MW Commercial Operations
turbines Date
------------- -------------------- ------------ ------------ -----------------------
Rodbaston Staffordshire 2 4.0 July 2016
------------- -------------------- ------------ ------------ -----------------------
Brackagh
Quarry County Londonderry 3 6.0 July 2016
------------- -------------------- ------------ ------------ -----------------------
French
Farm Cambridgeshire 2 4.0 July 2016
------------- -------------------- ------------ ------------ -----------------------
Barlborough Yorkshire 1 0.8 January 2016
------------- -------------------- ------------ ------------ -----------------------
Mynydd Rhonnda Cynon 6 12.0 To be determined
Portref Taf - 18.0
------------- -------------------- ------------ ------------ -----------------------
Hallburn Cumbria 6 12.0 To be determined
------------- -------------------- ------------ ------------ -----------------------
Rationale for the creation and issue of the ZDP Shares
A ZDP Share is not an equity share and does not entitle the
holder to any dividends, but is redeemable on a fixed redemption
date at a higher price than the initial subscription price, giving
the holder a fixed return. The amount due to holders of ZDP Shares,
which accrues over time, is accounted for as a liability rather
than as share capital. The ZDP Shares are expected to have a life
of approximately 6 years to the ZDP Repayment Date of 30 June
2021.
The effect of the issue of the ZDP Shares on the Company's
financial statements will be to show a long term liability in
respect of the amounts due to holders of ZDP Shares, which will
increase over the life of the ZDP Shares.
Historically, the Company's funding strategy has been to achieve
the growth of its diversified portfolio using a mixture of equity,
long-term bank finance and the proceeds of asset sales. The Board
believes that obtaining additional finance through the issue of ZDP
Shares, will allow the Company to accelerate projects into the RO
and hence the rate at which the Company can grow its recurring cash
flows and earnings.
Lenders charge interest and fees until debt is repaid, whereas
no cash is due to investors in ZDP Shares until the final
redemption date of the ZDP Shares, enhancing cash available to the
Group during this increased level of construction activity. The ZDP
Shares will not be redeemable for approximately 6 years although
the Board is seeking a general authority at the EGM to repurchase
ZDP Shares in the market from time to time.
3 AUTHORITY TO ISSUE ZDP SHARES
The Board is proposing to issue up to 31 million ZDP Shares at
the Issue Price to raise gross proceeds of up to GBP31 million
(GBP30.1 million net of expenses of the Issue).
In accordance with the Articles, the issue of the ZDP Shares
requires the approval of Shareholders in general meeting. At the
EGM, Resolution 3 will be proposed to give the Directors authority
to issue up to 31 million ZDP Shares under the Issue.
The pre-emption rights afforded to Ordinary Shareholders in the
Articles do not apply to the proposed Issue as the ZDP Shares only
have a right to participate in a capital distribution up to a
specified amount. Accordingly, the Board is not seeking
disapplication of the pre-emption rights at the EGM.
4 INCREASE TO THE AUTHORISED SHARE CAPITAL OF THE COMPANY
The authorised share capital of the Company at the date of this
letter is GBP30,000,000 divided into 300,000,000 Ordinary Shares of
10 pence each. In connection with the proposed ZDP Share issue, the
Directors are seeking Shareholder approval (Resolution 1 in the
notice of EGM) for an increase in the authorised share capital of
the Company to GBP60,000,000 divided into 300,000,000 Ordinary
Shares of 10 pence each and 300,000,000 ZDP Shares of 10 pence
each. The proposed increase in the authorised share capital
requires a consequential amendment to be made to the
Memorandum.
5 FURTHER ISSUES OF ZDP SHARES
The Board is seeking additional authority to issue up to 3.1
million ZDP Shares, or, if lower, such number of ZDP Shares as is
equal to 10 per cent. of the issued ZDP Share capital immediately
following conclusion of the Issue. This authority will expire at
the annual general meeting of the Company to be held in 2016. As
noted at paragraph 3 above, the pre-emption rights afforded to
Ordinary Shareholders in the Articles do not apply to an issue of
ZDP Shares as the ZDP Shares only have a right to participate in a
capital distribution up to a fixed amount.
The Board is seeking this additional authority to provide
flexibility to issue ZDP Shares to provide additional capital to
the Company when required, subject to market demand.
No further ZDP shares may be issued unless the Cover Test is
met. In addition, the Board has determined that no ZDP Shares will
be issued at a price less than the Accrued Capital Entitlement per
ZDP Share to avoid any reduction in the Cover of the existing ZDP
Shares.
In accordance with the Articles, the issue of the ZDP Shares
requires the approval of Shareholders in general meeting. At the
EGM, Resolution 4 will be proposed to give the Directors authority
to issue up to an additional 3.1 million ZDP Shares following
completion of the Issue, or, if lower, such number of ZDP Shares as
is equal to 10 per cent. of the issued ZDP Share capital
immediately following conclusion of the Issue.
6 REPURCHASES OF ZDP SHARES
The Company is also seeking authority (Resolution 5 to be
proposed at the EGM) to make market acquisitions of up to 14.99 per
cent. of the ZDP Shares in issue following the conclusion of the
Issue in order to seek to address any imbalance for the supply and
demand for ZDP Shares in the market.
The minimum price payable by the Company for each ZDP Share
shall be GBP0.10 and the maximum price payable by the Company for
each ZDP Share shall be the then Accrued Capital Entitlement per
ZDP Share to avoid any reduction in the Cover of the ZDP Shares.
This authority will expire (unless renewed) at the annual general
meeting in 2016.
ZDP Shares purchased by the Company may be cancelled or held in
treasury. Investors should note that the purchase of ZDP Shares is
entirely at the discretion of the Board and no expectation or
reliance should be placed on such discretion being exercised on any
one or more occasions or as to the proportion of ZDP Shares that
may be purchased.
7 ADOPTION OF NEW ARTICLES
Resolution 2 to be proposed at the EGM seeks approval to adopt
new articles of association incorporating the rights attaching to
the ZDP Shares and certain other amendments detailed below.
The ZDP Shares are expected to provide holders of ZDP Shares
with a Gross Redemption Yield of approximately 4.0 per cent. The
ZDP Shares will entitle the holders to a fixed capital return at
the end of the approximately 6 year life of the ZDP Shares (the
"ZDP Repayment Date"). In order to pay the holders of ZDP Shares
the fixed capital return, the ZDP Shares will be redeemed on the
ZDP Repayment Date.
The ZDP Shares will, in general, carry no right to vote at
general meetings of the Company. However, if the Proposals are
approved and the ZDP Shares are issued, then certain actions of the
Company will be subject to prior approval by the holders of ZDP
Shares at a separate class meeting. These actions include, without
limitation:
-- the issue of further shares where such shares
rank as to capital in priority to or pari
passu with the ZDP Shares, save where the
Cover Test is met;
-- the redemption or repurchase any Ordinary
Shares unless the Directors shall have calculated
that the Cover Test will be met;
-- passing a resolution for the voluntary winding-up
of the Company, such winding-up to take
effect prior to the ZDP Repayment Date;
-- making any distribution of capital or income,
provided that any such distribution will
be permitted where the Directors determine
that the Cover Test would be met; and
-- incurring additional third party borrowings
that would rank in priority or pari passu
to the entitlement of the ZDP Shares to
be paid their Final Capital Entitlement
on the ZDP Repayment Date if its aggregate
third party borrowings that rank in priority
or pari passu to the entitlement of the
ZDP Shares to be paid their Final Capital
Entitlement on the ZDP Repayment Date (including,
for the avoidance of doubt, the ZDP Shares
at their then Accrued Capital Entitlement)
would thereby exceed 70 per cent. of the
total assets of the Group.
Full details of the rights attaching to the ZDP Shares, and
further detail on the Cover Test, are set out in the Shareholder
Circular.
In addition, it is proposed that the New Articles reflect recent
amendments to the Companies (Jersey) Law 1991, as amended, to
include:
-- provision that, in calculating when proxies
must be delivered no later than "48 hours"
before a meeting, non-working days can be
ignored; and
-- clarification that multiple corporate representatives
can be appointed to attend general meetings
by a shareholder who is a body corporate.
8 REGULATORY REQUIREMENTS IN RESPECT OF THE ISSUE
The Company is required to publish a prospectus under the
Prospectus Rules in order to enable it to issue the ZDP Shares. It
is expected that the prospectus will, subject to Shareholder
approval of the Proposals and relevant Jersey regulatory approval,
be published shortly following the EGM.
Application will be made to the UK Listing Authority for
admission of the ZDP Shares issued pursuant to the Issue to the
Official List (a standard listing). Application will also be made
to the London Stock Exchange for the ZDP Shares issued pursuant to
the Issue to be admitted to trading on the London Stock Exchange's
main market for listed securities. It is expected that Admission
will become effective and that unconditional dealings in the ZDP
Shares will commence on or around 24 June 2015.
The Company's Ordinary Shares will continue to be admitted to
trading on AIM.
9 BENEFITS OF THE PROPOSALS
The Board believes that the Proposals have the following
principal benefits for Shareholders:
-- Financing the procurement and construction
phases of consented wind projects through
the ZDP Share issue is expected to enhance
the ability of the Company to deliver wind
projects under the existing Renewables Obligation
regime, which closes on 31 March 2017 or,
in the case of certain smaller projects,
the Feed-In-Tariff regime, before FIT payments
are subject to further degression.
-- The completion of the new investments referred
to in this letter is expected to generate
increased Net Asset Value and provide an
opportunity for earnings uplift for Ordinary
Shareholders in the longer term.
-- Raising finance through an issue of ZDP
Shares is expected to provide greater flexibility
for the future growth of the Company and
for acquiring further investments in line
with the Company's stated strategy.
10 FURTHER CONSIDERATIONS ASSOCIATED WITH THE PROPOSALS
Shareholders should have regard to the following considerations
when considering the Proposals:
-- On a return of capital on liquidation, the
final capital entitlement of the holders
of ZDP Shares will rank in priority to the
capital entitlement of Ordinary Shareholders
and Ordinary Shareholders may receive reduced
capital as compared to the present arrangements.
-- The Company's capital structure is such
that the underlying value of any assets
attributable to the Ordinary Shares will
be geared by the performance of the Company's
assets relative to the rising capital entitlement
of the ZDP Shares. Accordingly, Ordinary
Shareholders are likely, to a disproportionate
extent, to suffer from any underperformance
of the Company's assets compared to the
finance cost of the ZDP Shares, but conversely
will benefit from any performance above
such cost.
-- There can be no guarantee that the Company
will successfully implement the build out
of the consented wind projects referred
to in this letter or that earnings will
be increased for Ordinary Shareholders in
the longer term as a result of the Proposals.
Past performance is not necessarily a guide
to future performance.
-- If the Proposals are approved and the ZDP
Shares are issued, then certain actions
of the Company will be subject to prior
approval by the holders of ZDP Shares at
a separate meeting. These actions are outlined
at paragraph 7 above and in further detail
in the Shareholder Circular. The requirement
for the Company to obtain the consent of
holders of ZDP Shares in certain circumstances
may result in the Company being prevented
from taking certain actions which would
otherwise be in the interests of Ordinary
Shareholders.
-- The total costs of the Proposals are estimated
to be GBP900,000 and shall be paid from
the total gross proceeds of the Issue.
11 EXTRAORDINARY GENERAL MEETING
An Extraordinary General Meeting of the Company is being
convened for 11.30 a.m. on 8 June 2015 to be held at the Company's
registered office at Elizabeth House, 9 Castle Street, St Helier,
Jersey JE2 3RT at which the following Resolutions will be
proposed:
-- Resolution 1: to increase the authorised
share capital of the Company to GBP60,000,000
divided into 300,000,000 Ordinary Shares
of 10 pence each and 300,000,000 ZDP Shares
of 10 pence each and to amend the Memorandum
to reflect the increase to the authorised
share capital;
-- Resolution 2: to adopt the New Articles.
Resolution 2 is conditional on the passing
of Resolution 1;
-- Resolution 3: to grant the Directors authority
to issue up to 31 million ZDP Shares. Resolution
3 is conditional on the passing of Resolutions
1 and 2;
-- Resolution 4: to grant the Directors authority
to issue up to an additional 3.1 million
ZDP Shares or, if lower, such number of
ZDP Shares as is equal to 10 per cent. of
the ZDP Share capital in issue following
conclusion of the Issue. Resolution 4 is
conditional on the passing of Resolution
3; and
-- Resolution 5: to grant the Directors authority
to make market purchases of ZDP Shares.
Resolution 5 is conditional on the passing
of Resolution 3.
Under the Articles, two persons entitled to attend and vote on
the business to be transacted, each being a member or a proxy for a
member or a duly authorised representative of a corporation which
is a member, shall be a quorum. On a show of hands, each
Shareholder shall have one vote and, on a poll, each Shareholder
shall have one vote for every Ordinary Share held by him.
Resolutions 1, 2 and 5 will be proposed as special resolutions
and Resolutions 3 and 4 will be proposed as ordinary resolutions. A
special resolution requires a majority of two-thirds of the votes
cast to be cast in favour for it to be passed. An ordinary
resolution requires a simple majority of the votes cast to be cast
in favour for it to be passed.
The notice convening the Extraordinary General Meeting is set
out in the Shareholder Circular.
12 ACTION TO BE TAKEN BY SHAREHOLDERS
A Form of Proxy is enclosed with the Shareholder Circular for
use at the Extraordinary General Meeting. If you are a Shareholder,
whether or not you intend to attend the Extraordinary General
Meeting, you are requested to complete the Form of Proxy in
accordance with the instructions printed on it and return it to the
Registrar, Capita Asset Services, PXS1, 34 Beckenham Road,
Beckenham, Kent BR3 4ZF so as to arrive as soon as possible and, in
any event, not later than 11.30 a.m. on 6 June 2015.
13 RECOMMENDATION
The Board considers the Proposals to be in the best interests of
the Company and Shareholders as a whole. Accordingly, the Board
unanimously recommends that Shareholders vote in favour of the
Resolutions to be proposed at the EGM as they intend to do in
respect of their own beneficial holdings of Ordinary Shares
representing approximately 0.51 per cent. of the Company's issued
Ordinary Shares.
Yours sincerely
Mike Liston
Non-Executive Chairman"
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCLLFEREVIVLIE
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