Conditional Sale of AIM PowerGen Corporation

 

TIDMRWE 
 
RNS Number : 9250Z 
Renewable Energy Generation Ltd 
30 September 2009 
 

 
 
Press Release30 September 2009 
 
 
Renewable Energy Generation Limited 
("REG" or the "Group" or the "Company") 
Recommended proposals for the sale of the entire issued share capital of AIM 
PowerGen Corporation, the cessation of the Company's 'fund' designation status 
and the migration of the Company to Jersey 
Conditional Sale of AIM PowerGen Corporation 
REG today announces that it has entered into a conditional sale agreement (the 
"Sale Agreement") in relation to the sale to International Power Canada, Inc. of 
the entire issued share capital of AIM PowerGen Corporation ("AIM") for an 
initial cash consideration of C$ 119 million (approximately GBP69 million) (the 
"Sale"). 
AIM is a leading Canadian independent wind developer that takes wind projects 
from initial concept through feasibility and permitting to construction and 
operation. AIM currently owns four operational windfarms which it has developed, 
with a total installed capacity of approximately 40 MW (Cultus, Frogmore, Mohawk 
Point and Clear Creek). A further circa 40 MW is currently the subject of 
project financing and construction (Harrow). In addition, AIM owns a large 
portfolio of potential wind projects at various stages of development, 
throughout Canada. 
For the six month period ended 31 December 2008, AIM's operations generated 
revenues of GBP1.9 million and gross profit of GBP0.5 million and, as at 31 
December 2008, it had a net asset value of GBP54.0 million. 
Under rule 15 of the AIM Rules for Companies, the Sale is deemed to be a sale 
resulting in a fundamental change of business and accordingly the Sale is 
conditional, inter alia, on the approval by the shareholders of the Company 
("Shareholders") of an ordinary resolution to be proposed at an extraordinary 
general meeting to be convened for, amongst other things, that purpose (the 
"EGM"). 
 
 
Reasons for and details of the Sale 
The Company has taken the strategic decision to focus on the UK onshore wind 
market where it sees significant growth opportunities over the next few years. 
In addition to its existing operational portfolio totalling 21.3 MW, the Group 
has two fully consented wind projects at Goonhilly Downs and Loscar totalling 
around 15 MW. In addition, the Group has a number of other projects that are 
reaching the end of the planning process. 
The Company will receive an initial cash consideration of C$ 82.7 million 
together with the repayment of inter-company indebtedness of C$ 29.9 million. A 
further consideration of C$ 6.0 million is also payable, subject to certain 
specified amendments being made to project documentation. Additional deferred 
consideration of up to C$ 6.0 million may also become payable subject to the 
release of funds held in escrow by Fortis Bank (Canada) Ltd, which are 
principally contingent on an operational output assessment of AIM's operating 
assets. The purchase price is subject to a closing account adjustment mechanism. 
The proceeds of the Sale, approximately GBP67 million (net of transaction 
costs), will be utilised by the Company to fund ongoing activities in the UK of 
developing, owning and operating wind farms and generating power from refined, 
used vegetable cooking oil. 
The proceeds will also be used to repay the Company's facility with Bank of 
Scotland plc (with indebtedness to the bank as at the date of this announcement 
being approximately GBP17 million). 
 
 
Cessation of the Company's 'fund' designation status and the migration of the 
Company to Jersey 
Further, the Board has reviewed the operating structure of the Company and is 
proposing to cease the Company's designation as a fund (the "Cessation of 'Fund' 
Designation Proposal") whilst moving the Company's domicile from Guernsey to 
Jersey (the "Migration Proposal"), subject, amongst other things, to the consent 
of the authorities in Guernsey and Jersey. 
In addition to being conditional, amongst other things, on the approval by 
Shareholders of resolutions to be proposed at the EGM and the consent of the 
Guernsey Financial Services Commission, and the Jersey Financial Services 
Commission, the Cessation of 'Fund' Designation Proposal and the Migration 
Proposal are both conditional upon the Sale Agreement becoming unconditional and 
the Sale of AIM PowerGen Corporation being completed. 
Following discussions with the London Stock Exchange, it has been determined 
that the Ordinary Shares of the Company will be cancelled from trading on the 
AIM Market of the London Stock Exchange (the "AIM Market") and will then be 
admitted simultaneously to trading on the AIM Market, following the completion 
of the cessation of the Company's fund status and the redomiciliation of the 
Company. 
 
 
Recommendation 
The Board of REG is recommending that Shareholders vote in favour of the 
resolutions to be proposed at the EGM to be convened for 10.00am on 16 October 
2009 at Carey House, Les Banques, St Peter Port, Guernsey GY1 4BZ. Those 
Directors who hold shares in the Company intend to vote in favour of the 
resolutions to be proposed at the EGM in respect of their own beneficial 
holdings of Ordinary Shares amounting, in aggregate, to 369,648 Ordinary Shares 
(representing approximately 0.36 per cent. of the Ordinary Shares in issue). 
 
 
A circular (the "Circular") will be posted by the Company to Shareholders 
shortly that details the above proposals and convenes the EGM to approve the 
proposals. A copy of that Circular will be made available online at 
http://www.renewableenergygeneration.co.uk. 
Andrew Whalley, CEO of REG, commented: 
"I am delighted that we have reached agreement with International Power on the 
sale of AIM PowerGen. The sale of AIM PowerGen will release funds to allow us to 
refocus our efforts on building a substantial portfolio of UK onshore wind 
assets. The transaction materially strengthens our balance sheet and profit and 
loss account and will allow us to proceed quickly to the construction of the 
Goonhilly Downs and Loscar wind farms. Furthermore, several other projects are 
now approaching planning determination and our balance sheet will now be able to 
support the construction of many new projects over the next few years. 
In addition, REG Bio Power has made sound progress in gaining the necessary 
permits to build a portfolio of small power plants operating on recycled 
vegetable oil. Some of the capital raised from the sale of AIM PowerGen will 
also be used to fund a processing plant in Norfolk capable of processing up to 
15,000 tons of recycled vegetable oil per annum. 
I would like to thank the AIM management team for their hard work in this 
transaction and I wish International Power well as they build a substantial 
portfolio of wind projects in Canada." 
 
 
Consequences of the Sale not proceeding 
If the Sale does not proceed, the ability of the Group to further develop and 
construct its UK and Canadian wind portfolios would be reliant on a strategy of 
further debt raising in the UK and Canadian credit markets along with the sale 
of existing assets to fund future growth. The Board's growth expectations for 
the Group would be reduced, as funds could not necessarily be made available as 
quickly to take advantage of current opportunities in the UK business, nor would 
the Group be able to quickly fund opportunities in the Canadian business. 
REG will also be dependent on alternative funding sources in order to satisfy 
the requirements of the AIM team of the London Stock Exchange in respect of the 
Migration Proposal and the Cessation of 'Fund' Designation Proposal (further 
details of which will be contained in the Circular) and to ensure that the 
Company is in a position to make the requisite going concern statement at such 
time as is required and without qualification. 
 
 
Contacts: 
 
 
Renewable Energy Generation Ltd                                        Tel: 
01483 901 790 
Andrew Whalley, Chief Executive Officer 
David Crockford    , Finance Director 
 
 
Lexicon Partners (Financial Adviser to REG)    Tel: [phone] 
Read Gomm 
Hichem Zebidi 
 
 
Numis Securities Ltd    Tel: [phone] 
Nominated Advisor: Simon Blank / Hugh Jonathan 
Corporate Broker: David Poutney / Charlie Farquhar 
 
 
Hogarth Partnership Ltd 
Tel: [phone] 
Sarah MacLeod 
Julian Walker 
Vicky Watkins 
 
 
 
 
Notes to Editors 
An exchange rate of GBP1: C$1.73 has been applied in this announcement. 
www.renewableenergygeneration.co.uk 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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