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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Renewable Eng. | LSE:WIND | London | Ordinary Share | JE00B3B67P11 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 59.50 | 0.00 | 00:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Dec 2019 to Dec 2024
TIDMWIND
RNS Number : 6582H
Renewable Energy Generation Ltd
02 December 2015
Renewable Energy Generation Limited ("the Company" or "REG")
Proposed Sale of the Group's Business including the Related Party Transaction, Delisting, Winding Up and Return of Cash to Shareholders
Notice of Extraordinary General Meeting
Summary
Hot Features
Premium
-- The Board announces the recommended disposal
of the entire business of the Company for
cash in a transaction with a fund managed
by BlackRock that values the Company's equity
before exit costs, at GBP64.5 million.
-- Following completion of the Sale and Delisting,
it is proposed that Liquidators be appointed
pursuant to oversee a liquidation process
during which the majority of the net cash
proceeds of the Sale will be returned to Shareholders.
-- The target initial (and likely final) liquidation
distribution is expected to be approximately
60.0 pence per Ordinary Share which should
be payable on or around 29 January 2016. On
conclusion of the liquidation a maximum final
distribution (if any) of up to a further 0.3
pence per Ordinary Share will be made.
-- The initial liquidation payment represents
a premium of 61.1 per cent. to the closing
price of an Ordinary Share on 8 October 2015,
the day immediately prior to the announcement
by the Company of receipt of the initial non-binding
offer.
-- The Sale is conditional only on approval by
more than 50% of the votes cast (in person
or by proxy) at the Extraordinary General
Meeting ("the Sale Resolution").
-- In order to return cash to Shareholders by
way of a liquidation payment, Shareholders
approval is sought for the Delisting, Winding
Up and Liquidation Resolutions (details of
which are given below).
Background
-- On 18 June 2015, the newly elected UK Government
announced the start of a process of dismantling
green incentives. The proposed policy changes
include the closure of the Renewables Obligation
(RO) to onshore wind and ground-mounted solar
projects, continued reductions to the small
scale wind feed-in tariff (FIT), elimination
of onshore wind from feed-in tariff contracts
for difference (CFD FIT), stricter planning
policies with respect to onshore wind farms
and elimination of the climate change levy
(CCL) exemption for renewable generators.
-- Any one of these factors alone would have
a significant impact on the Group but, taken
together, the impact is profound.
-- Since the General Election, the Board has
been assessing the impact of these policy
changes on the Group's future. During this
process, the Board received a non-binding
offer for its trading subsidiaries, representing
the business, assets and undertakings of the
Company. The Offer was announced by the Board
on 9 October 2015 and today the Board announces
the Company has accepted the Offer, subject
only to Shareholder approval.
Structuring and Related Party Transaction
-- The Offer is structured through two inter-conditional
sale and purchase contracts:
* a conditional contract relating to the disposal of
part of the Group's business, comprising its
operating and consented wind and solar project assets,
to a fund managed by BlackRock; and
* as a requirement of BlackRock, a second conditional
contract relating to the disposal of the Group's
remaining business to Helium Miracle 184 Limited, a
new company owned by Manco EBT, established for the
benefit of the Company's executive directors and
members of senior management.
-- The Independent Directors have been advised
by Smith & Williamson in relation to their
assessment of the Offer and the Related Party
Transaction.
Additional details
-- Shareholders' approval is being sought for
the Sale, the Delisting and the Winding Up
at an Extraordinary General Meeting to be
held at Elizabeth House, 9 Castle Street,
St Helier, Jersey, JE2 3RT at 10.00 am on
18 December 2015. A circular convening the
Extraordinary General Meeting has been sent
today to shareholders and other persons entitled
to receive it.
-- An application has been made to the London
Stock Exchange for the cancellation of the
admission to trading on AIM of the Ordinary
Shares. Subject to completion of the Sale
and the passing of the Delisting Resolution
at the EGM, it is expected that cancellation
of the admission of the Company's Ordinary
Shares to trading on AIM will occur at 7.00
a.m. on 5 January 2016.
-- Immediately upon Delisting, the Winding Up
will commence and the Liquidators will be
appointed to undertake the liquidation of
the Company and the Return of Cash to Shareholders.
Shareholders on the Register on Delisting
will be eligible to participate in the Return
of Cash. The Directors have appointed Philip
Braun and Matthew Corbin of BDO Limited as
Liquidators, subject to the Shareholders approval
of the Sale, Delisting, Winding Up and Liquidation
Resolutions.
This summary should be read in conjunction with, and is subject to, the full text of the following announcement.
Enquires
Mike Liston,
Chairman
Renewable Energy Andrew Whalley, +44 (0)1483
Generation CEO 901 796
+44 (0)20 7397
Cenkos (Broker) Bobbie Hilliam 8900
Smith & Williamson
Corporate Martyn Fraser +44 (0)117
Finance Limited Sara Thompson 376 2213
Expected timetable of events
Circular and Form of Proxy 2 December 2015
posted
Latest time and date for receipt 10.00 a.m. on 16
of Form of Proxy for EGM December 2015
EGM 10.00 a.m. on 18
December 2015
Completion of the Sale 23 December 2015
Completion of the Option Exercise 24 December 2015
Admission to AIM of Option 4 January 2016
Shares
Delisting from AIM and Record 7.00 a.m. on 5 January
Date 2016
Commencement of the Winding 7.00 a.m. on 5 January
Up 2016
Target first cash liquidation 29 January 2016
distribution to Shareholders
pursuant to the Return of Cash
Notes:
1. References to times in this document are to
the prevailing time in Jersey. All dates and
times are subject to change. If any of the above
dates and times should change, the revised dates
and/or times will be notified to Shareholders
by an announcement on a regulatory information
service.
2. All events following the EGM are conditional
upon approval by Shareholders of the relevant
Resolutions required to give effect to the event
concerned.
3. On commencement of the Winding Up the liquidation
of the Company will be advertised. There will
be a 21 day period during which creditors of
the Company will have the opportunity to raise
a claim.
This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities, whether pursuant to this announcement or otherwise.
The distribution of this announcement in jurisdictions outside of the United Kingdom may be restricted by law and therefore, persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of any such jurisdiction.
This announcement contains forward looking statements including, without limitation, statements containing the words "believes", "estimates", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or similar expressions. Such forward looking statements involve unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement of the Company, or industry results, to be materially different from future results, performance or achievements expressed or implied by such forward looking statements.
Given these uncertainties, persons reading this announcement are cautioned not to place any undue reliance on such forward looking statements. These forward looking statements apply only as at the date of this announcement. Subject to its legal and regulatory obligations, the Company expressly disclaims any obligations to update or revise any forward looking statement contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based unless required to do so by law or any appropriate regulatory authority.
Letter from the Chairman of Renewable Energy Generation Limited
"Dear Shareholder
Proposed Sale of the Group's business, including the Related Party Transaction, Delisting, Winding Up and Return of Cash to Shareholders and Notice of EGM
1. Introduction
(MORE TO FOLLOW) Dow Jones Newswires
December 02, 2015 02:01 ET (07:01 GMT)
The Board announced today the recommended disposal of the entire business of the Company in a transaction valuing the Group's equity before exit costs, at GBP64.5 million. This document provides you with the background to and reasons for the disposal and convenes the Extraordinary General Meeting for the purpose of seeking Shareholder approval of the Proposals.
On 18 June 2015, the newly elected UK Government announced the start of a process of dismantling green incentives. The proposed policy changes include the closure of the Renewables Obligation (RO) to onshore wind and ground-mounted solar projects, continued reductions to the small scale wind feed-in tariff (FIT), elimination of onshore wind from feed-in tariff contracts for difference (CFD FIT), stricter planning policies with respect to onshore wind farms and elimination of the climate change levy (CCL) exemption for renewable generators. Any one of these factors alone would have a significant impact on the Group but, taken together, the impact is profound. Since the General Election, your Board has been assessing the impact of these policy changes on the Group's future.
During this process, the Board received a non-binding offer for its trading subsidiaries, representing the business, assets and undertakings of the Company (Offer). The Offer was announced by the Board on 9 October 2015 and today your Board has announced that the Company has accepted the Offer, subject only to Shareholder approval.
The Offer is structured through two inter-conditional sale and purchase contracts:
-- a conditional contract relating to the disposal of part of the Group's business, comprising its operating and consented wind and solar project assets, to RI Income Holdings Limited (BlackRock), a company controlled by BlackRock Renewable Income Fund;
-- as a requirement of BlackRock, a second conditional contract relating to the disposal of the Group's remaining business to Helium Miracle 184 Limited (Manco), a new company owned by the Manco EBT;
-- to enable the Company to return the majority of the sale proceeds to Shareholders through a winding up process, Manco has agreed to assume certain contingent liabilities relating to warranties and indemnities given by the Group in connection with previous sale transactions, the Group's employment-related liabilities, a guarantee over third party debt and guarantees given by the Company to more than one of the Group's subsidiaries relating to leasehold obligations.
On completion of the Sale, Manco is required to enter into the Construction Management Agreements with BlackRock, to complete the construction of the consented assets. Manco is also required to enter into the Asset Management Agreements and the Asset Investment Agreement with BlackRock.
BlackRock will also have a "first look" option to acquire assets to be developed by Manco.
Manco is controlled by the Manco EBT, established for the benefit of the Company's executive directors and members of senior management and, accordingly, on receiving the Offer, the Independent Directors appointed Smith & Williamson to advise them in relation to their assessment of the Offer. Further information about Manco is set out in Part 2 of this Circular.
The Proposals will generate an estimated net cash distribution, net of all exit costs, of approximately 60 pence per Ordinary Share, representing a premium of 61.1 per cent. to the closing price of an Ordinary Share on 8 October 2015, immediately prior to the announcement by the Company of receipt of the offer.
As part of the Proposals, the Group's net debt will be acquired pursuant to the Share Purchase Agreements. At 30 November 2015, the latest practicable date prior to publication of this Circular, net debt comprised GBP18.8 million, being GBP26.2 million of debt, GBP2.6 million of restricted cash and GBP4.8 million of unrestricted cash. The Proposals therefore represent an enterprise value of approximately GBP91 million which is cash funded and not subject to any financing conditions.
The Independent Directors unanimously recommend that Shareholders vote (or submit voting instructions to vote) in favour of the resolutions to be proposed at the Extraordinary General Meeting. In reaching this recommendation, the Independent Directors wish to draw Shareholders' attention to the following key aspects of the Proposals:
-- the Independent Directors have considered the alternative strategy of continuing to operate the Company as an independent entity. They have also considered the sale of assets on a piecemeal basis through a competitive sale process. However, they have concluded that the Sale is in the best interests of Shareholders as a whole. The Sale, Delisting and Winding Up to return cash to Shareholders therefore form the recommended transaction. The Independent Directors have reached this conclusion due to factors including (inter alia):
(i) the certainty it provides to Shareholders in terms of a return of cash in the context of great uncertainty within the UK renewables sector;
(ii) that BlackRock's valuation of the operational assets is consistent with the methodology adopted on previous asset disposals, having taken into account factors such as the elimination of the CCL, and inflation assumptions;
(iii) the operational assets comprise eleven small sites, some of which have already been operating for over eight years. The ability to secure value for these through a portfolio sale eliminates the significant risk that would attach to a piecemeal disposal of such assets;
(iv) the relative size of the consented assets and level of uncertainty and construction risk being assumed by BlackRock;
(v) that BlackRock has ascribed value in respect of the consented assets on the basis that it is able to fund construction of these assets such that they qualify for the RO or the FIT. This preserves approximately GBP14.3 million of value at risk in these projects;
(vi) the establishment of Manco relieves the Company of real and contingent liabilities that would reduce any return to Shareholders in the event of a voluntary winding up of the Company; and
(vii) that in the weeks since the Company's announcement of the receipt of the Offer, the Company has not received competing offers for its shares or all or part of its assets from any other party.
The consequences for Shareholders that would result in the event that any of the Resolutions are not approved, would be that the Company would not be able to raise debt or equity capital to unlock value in the consented assets, where speed is of the essence, and there can be no certainty whether the Company could successfully raise such funds or as to the terms on which such funds could be raised which would have an adverse impact on the Company's asset value.
All of the Directors and Management Team have signed irrevocable undertakings to vote in favour of the Resolutions (other than in relation to the first Resolution, in relation to which Andrew Whalley and David Crockford are prevented from voting). Following completion of the Sale, which will occur, subject to the Sale Resolution being passed, shortly after the EGM and subject to and conditional on the Delisting Resolution and the Winding Up Resolution being passed, it is proposed that the Liquidators be appointed pursuant to the Liquidator Resolution upon the commencement of the Winding Up immediately following the Delisting. The Liquidators will oversee a liquidation process during which it is proposed that the majority of the cash proceeds of the Sale (net of transaction costs) will be distributed to Shareholders at the earliest opportunity. Further details are set out in paragraph 6 of Part 4 of this Circular.
The target initial (and likely final) liquidation distribution (based on the assumptions set out in paragraph 6 of Part 4 of this Circular and on the assumption set out immediately after the table below) is expected to be approximately 60 pence per Ordinary Share which should, if the Resolutions are passed and the Pre-Distribution Matters are completed in accordance with the expected timetable set out in this Circular, be payable on or around 29 January 2016.
GBPm Pence
per
Ordinary
Share
(1)
Cash received pursuant to the Offer 64.5 60.8
Cash receivable pursuant to the
Option Exercise 1.4 1.3
Cost of Sale (1.3) (1.2)
Cash retention for other liabilities
to be settled in the course of
the Winding Up (0.6) (0.6)
------ ----------
Amount attributable to Shareholders 64.0 60.3
Comprising:
Target initial (and likely final)
liquidation distribution on 29
January 2016 63.7 60.0
Maximum final distribution (if
any) 0.3 0.3
------ ----------
(1) Based on the total number of issued Ordinary
Shares after completion of the Option Exercise
The returns shown above are conditional, inter alia, on the Resolutions being passed and assume that all Options which are capable of exercise pursuant to the Option Exercise are exercised and are based on a number of other assumptions as set out in paragraph 6 of Part 4 of this Circular.
(MORE TO FOLLOW) Dow Jones Newswires
December 02, 2015 02:01 ET (07:01 GMT)
In connection with the Option Exercise, details of which are set out in paragraph 11 of Part 4 of this Circular, the Company may transfer up to 261,000 Ordinary Shares from treasury and up to 50,000 from the EBT Trustee and issue new Ordinary Shares to the extent necessary in satisfaction of the exercise of Options. If all Options which become capable of exercise, as a result of the Proposals, are exercised, the Company will transfer from treasury or issue, in aggregate, up to 2.4 million Ordinary Shares resulting in an issued share capital comprised of approximately 106.1 million Ordinary Shares. The Ordinary Shares transferred from treasury will cease to be treasury shares and will have all the rights and restrictions of Ordinary Shares.
An application has been made to the London Stock Exchange for the cancellation of the admission to trading on AIM of the Ordinary Shares. Subject to the passing of the Delisting Resolution at the EGM, it is expected that cancellation of the admission of the Ordinary Shares to trading on AIM will occur at 7.00 a.m. on 5 January 2016.
Shareholders' approval is being sought for the Sale (including the Related Party Transaction), the Delisting, the Winding Up, the appointment of the Liquidators and the adoption of the New Articles at the EGM, to be held at 10.00 a.m. on 18 December 2015. The Notice of the EGM is set out in Part 6 of this document.
Please read the whole of this Circular and do not rely solely on the summarised information set out in this letter.
2. Background to and reasons for the Sale
Changes to the UK Renewables Regime
The election of the Government on 7 May 2015 has had a profound impact on the UK Renewables sector. On 18 June 2015, the Department of Energy and Climate Change confirmed the Government's intention to implement its General Election manifesto promise to end new public subsidies for onshore wind and transfer more planning powers to local communities in respect of new projects. The Secretary of State for Energy and Climate Change and the Secretary of State for Communities and Local Government each provided written statements in Parliament which, in summary, provided for:
-- Great Britain-wide closure of the Renewables Obligation to onshore wind from 1 April 2016, one year earlier than planned;
-- an intention to implement the Conservative Party's manifesto commitment to end new onshore wind when announcing plans to remove onshore wind from participation in further CFD FIT allocations; and
-- planning guidance to be changed as of 18 June 2015 to require new onshore wind energy developments to be granted planning permission only if these are included within a local or neighbourhood development plan and it can be demonstrated that the scheme has the backing of the local community.
These changes are being made through a new Energy Bill which is passing through Parliament in the current session. It is anticipated this will include the granting of "grace periods" to UK onshore wind projects with, as of 18 June 2015, a planning consent, a grid connection offer and acceptance and evidence of land rights for the site on which the project is to be built.
On 8 July 2015 the Government further announced its intention to discontinue the CCL exemption for renewable generators with effect from 1 August 2015, meaning that Levy Exemption Certificates would not be available for renewable electricity generated after that date. The CCL has been a key component of the renewable support regime in the UK since 2001 and the renewable industry had understood that phase-out would not start until after 2020.
Further adverse policy changes since the 2015 General Election have also contributed to a deterioration of investor confidence in the renewables sector. These include the removal of sub-5MW ground-mounted solar projects from the RO from April 2016, changes to FIT to prevent pre-accreditation of projects and proposals to drastically reduce tariffs under the FIT for wind, hydro and solar PV. All of these proposals impact adversely on the Group's existing and future business opportunities.
The proposed legislative and planning changes have, in the Directors' opinion, further impacted the willingness of the banking sector to provide long term debt to UK onshore wind projects before the legislation gains Royal Assent, currently anticipated to be in March 2016 and, until this time, the Directors believe that lending is more difficult to secure on acceptable terms.
Impact of these changes on REG
The Group's stated strategy had been to transition from a wind power development business to a wind power generator. The Group had previously sold some 60.5MW of assets, generating net proceeds of GBP53.8 million as part of its strategy to "develop and sell to develop and hold". As at 18 June 2015, the Group had 34.7MW of operating wind plant, 0.8MW of projects under construction and 42MW of consented projects awaiting funding to construction. Funding was to be provided by a mix of project finance, a ZDP share issue and the sale of a final tranche of selected assets to BlackRock.
Government policy announcements had an immediate impact on delivery of this strategy:
-- the Group has made provision for approximately GBP12.8 million of impairments to investment in certain of its projects, which risked being incapable of completion before the premature closure of the RO. This covered approximately 200MW of UK onshore wind projects and 80MW of UK onshore solar projects which, based on the historic consenting levels, would have been expected to create considerable value for Shareholders;
-- the Group reported an immediate reduction in EBITDA from its operating plant of GBP0.4 million due to elimination of the CCL;
-- the Board cancelled the GBP30 million ZDP share issuance when investors, reacting to policy chaos, demanded terms which the Board considered detrimental to Shareholders; and
-- a redundancy programme was implemented to reduce the Group's overhead cost base by approximately GBP1.3 million per annum.
Projects in the procurement and construction phase
As at the date of this Circular, the Group has a portfolio of around 34.8MW of UK onshore wind projects in procurement or construction. The construction costs that remain to be incurred in respect of these 6 sites is approximately GBP47.2 million.
Site Status Anticipated Anticipated Anticipated Commercial Operations Date
number MW
of turbines
Mynydd Portref Consented 6 12.0 January 2017
French Farm Under construction 2 4.0 July 2016
Rodbaston Under construction 2 4.0 July 2016
Brackagh
Quarry Under construction 3 6.0 September 2016
Mynydd Brombil Consented 4 8.0 October 2016
Barlborough Under construction 1 0.8 January 2016
The first four of these projects are expected to benefit from the "grace period" proposed by the Government. Accordingly, the Board currently anticipates that these four projects will be developed and delivered within the RO. These projects will be acquired by BlackRock which will assume the full construction risk (assuming the Sale Resolution is passed and the BlackRock Share Purchase Agreement completes) despite the uncertainties which remain in relation to these projects.
Mynydd Brombil received planning permission on 10 July 2015 and is therefore outside of the proposed "grace period" but has a pending application for pre-accreditation under the Community FIT regime.
Barlborough, is already pre-accredited under the FIT regime.
The circular sent to you in May 2015 in relation to the planned ZDP issuance referred to the 12MW Hallburn project in Cumbria. This project has a planning condition preventing its construction until a radar mitigation scheme has been agreed with the local planning authority in respect of mitigating the impacts of the development on the RAF Spadeadam primary surveillance radar. Discussions with the Ministry of Defence are ongoing and consequently the project does not form part of the Group's portfolio of projects in the procurement and construction phase.
Operational Wind Power Assets
As at the date of this Circular, the Group has a portfolio of around 34.7MW of operational windpower sites generating revenue of approximately GBP9.1 million in the year ended 30 June 2015 with an EBITDA of GBP7.0 million.
Site Date of commencement Number of MW
of operations turbines
High Sharpley February 2007 2 2.6
High Pow March 2007 3 3.9
Braich Ddu November 2007 3 3.9
Roskrow Barton January 2008 2 1.7
Whittlesey September 2008 1 1.8
Ramsey September 2008 1 1.8
Loscar October 2010 3 4.5
High Haswell March 2011 2 4.0
Burnthouse
Farm June 2013 3 6.0
Orchard End March 2013 2 4.0
High Down March 2014 1 0.5
Operational Ground Mounted Solar Assets
In October 2015, the Group completed the construction of the 2.64MWp Mendennick Solar project, a ground-mounted solar PV scheme located on the Rame Peninsula in Cornwall, UK. The project is currently undergoing commissioning tests and is expected to be fully operational in early 2016. The project was developed and built using the Group's own capital resources at a total construction cost of around GBP2.75 million.
Effect of the Sale
(MORE TO FOLLOW) Dow Jones Newswires
December 02, 2015 02:01 ET (07:01 GMT)
Under the Proposals and assuming the Sale Resolution is passed at the EGM, each of the projects in its procurement and construction phase will be sold to BlackRock, as well as the operational wind power assets and the Mendennick Solar project referred to above, pursuant to the BlackRock Share Purchase Agreement.
Manco will, assuming the Sale Resolution is passed, acquire the Rump Assets. Further detail about Manco is set out in Part 2 of this Circular.
Delisting from AIM
As part of these Proposals, the Board will seek the cancellation of the Ordinary Shares from admission to trading on AIM. Pursuant to Rule 41 of the AIM Rules, Delisting requires the consent of not less than 75% of votes cast by Shareholders (in person or by proxy) at a general meeting. The Company has notified the London Stock Exchange of the proposed cancellation and delisting. If Shareholders approve the necessary Resolutions, it is anticipated that the last day of dealings in the Ordinary Shares on AIM will be 4 January 2016 and the Delisting Date will be at 7.00 a.m. on 5 January 2016.
Further details on the proposed Delisting are set out in section 4 below.
Related Party Transactions
Manco is a Related Party of the Company pursuant to the AIM Rules. The Board has therefore appointed a committee comprising the Independent Directors to assess the merits of the Offer. As a result, the executive directors of the Company, who are related parties for the purposes of the AIM Rules, have been excluded from the discussion, recommendation and voting in relation to the Sale and will be unable to exercise any vote in their capacity as Shareholders at the EGM with respect to the Sale Resolution.
3. Winding up and Return of Cash
Subject to and conditional upon the passing of Resolutions 1, 2 and 3 and completion of the Sale, the Option Exercise, Admission and the Delisting, the Liquidators will start the Winding Up. The Winding Up will commence with effect from Delisting.
In the course of the Winding Up, the Return of Cash will be made by the Liquidators to Shareholders whose names are recorded on the register of members of the Company on the Record Date.
Shareholders without CREST accounts
Cheques in respect of the first liquidation distribution are expected to be dispatched on 29 January 2016 to Shareholders who do not hold their Ordinary Shares in CREST accounts. Cheques will be dispatched at the Shareholders' own risk.
Shareholders with CREST accounts
It is expected that CREST accounts will be credited with the proceeds of the first liquidation distribution on 29 January 2016.
The Company's CREST facility will be maintained until completion of the Winding Up to facilitate the payment by the Liquidators of the first liquidation distribution and any residual liquidation distribution. Payments will be made to Shareholders whose names are recorded on the register of members of the Company on the Record Date. Payments will be rounded down to the nearest whole pence.
4. Process for Delisting and its effects
AIM
In accordance with Rule 41 of the AIM Rules, the Company has today notified the London Stock Exchange of the intention to delist, subject to the passing of Resolutions 1 and 2 and completion of the Sale and the Option Exercise. Under the AIM Rules, it is a requirement that the Delisting is approved by not less than 75% of votes cast by Shareholders (in person or by proxy) at the EGM. Upon the Delisting becoming effective, the Company will no longer be required to comply with the rules and corporate governance requirements to which companies admitted to trading on AIM are subject, including the AIM Rules, and the appointment of Smith & Williamson as nominated adviser and Cenkos as broker to the Company will cease.
Subject to and conditional upon Resolutions 1 to 4 being passed, completion of the Sale, completion of the Option Exercise and Admission, and the Delisting becoming effective, the appointment of each of the Directors will be terminated upon commencement of the Winding Up immediately following the Delisting and the appointment of the Liquidators as liquidators to the Company will commence.
Following the Delisting, the Ordinary Shares will not be traded on any public market. The Company's CREST facility will be cancelled after the Winding Up is completed.
The Ordinary Shares will not be transferable following the Delisting, except with the written approval of the Liquidators or Directors (as the case may be) (and subject to the provisions of the New Articles).
Existing share certificates remain valid until completion of the Winding Up.
5. EGM and explanation of the Resolutions
The EGM to consider and, if thought fit, pass the Resolutions, will be held at the Company's registered office at Elizabeth House, 9 Castle Street, St Helier, Jersey JE2 3RT at 10.00 a.m. on 18 December 2015. The notice of the EGM is set out in Part 6 of this document.
Resolution 1
In order to complete the Sale, an ordinary resolution of Shareholders must be passed to approve the Sale. This is the Sale Resolution, and it will be passed if a simple majority of the votes cast (in person or by proxy) are in favour. The Sale Resolution is not conditional on any of the other Resolutions being passed.
Resolution 2
The Delisting Resolution proposes that, conditional upon completion of the Sale, completion of the Option Exercise, the Admission, admission to trading of the Ordinary Shares on AIM be cancelled on the Delisting Date. In accordance with the AIM Rules, the Delisting Resolution requires at least 75% of the votes cast (in person or by proxy) to be in favour.
Resolution 3
The Return of Cash will only be made in the course of the Winding Up. The Winding Up Resolution proposes that, conditional upon the passing of the Sale Resolution and the Delisting Resolution and completion of the Sale and completion of the Option Exercise and the Admission and the Delisting, the Company shall be wound up summarily. In terms of the Winding Up Resolution, such winding up will commence with effect from Delisting at 7.00 a.m. on the Delisting Date. The Winding Up Resolution must be passed as a special resolution, and will be passed if at least two-thirds of the votes cast (in person or by proxy) are in favour.
Resolution 4
The Liquidator Resolution proposes that, conditional upon the passing of each of the Sale Resolution, the Delisting Resolution and the Winding Up Resolution and completion of the Sale, completion of the Option Exercise, Admission and Delisting, the Liquidators shall be appointed.
There is no obligation under the Law or the Articles to appoint a liquidator for the purposes of a summary winding up. However, given the complexity of the Company's affairs and the nature of the Proposals the Independent Directors consider that it is in the best interests of Shareholders if an independent liquidator conducts the Winding Up. Pursuant to the Law, the proposal to appoint the Liquidators will need to be made by way of a special resolution on or after commencement of the Winding Up. The Liquidator Resolution must be passed as a special resolution and will be passed if at least two-thirds of the votes cast (in person or by proxy) are in favour. The Law sets out the statutory provisions as to the qualifications that a liquidator must hold. If the Liquidators are appointed, pursuant to the Law:
-- all powers of the Directors in respect of the Company cease and are exercisable only by the Liquidators;
-- the Liquidators may be removed by the passing of a special resolution of the Company for the Liquidators' removal. The Liquidators will be required to vacate their appointment as Liquidators if they cease to be qualified to hold office as a liquidator; and
-- during the period that the Company is being wound up, every invoice, order for goods or services or business letters issued by or on behalf of the Company must contain a statement that it is in liquidation.
Resolution 5
The Articles Resolution proposes that, conditional on the passing of each of the Sale Resolution, the Delisting Resolution, the Winding Up Resolution and the Liquidator Resolution and completion of the Sale, the Option Exercise, Admission and the Delisting, the Articles be amended and restated. The current Articles of the Company contain a number of provisions that are not suitable or required following the Delisting including, without limitation, provisions relating to the market purchase of shares, uncertificated shares, the London Stock Exchange, AIM and the AIM Rules. It is therefore proposed to replace the Articles with a standard form of articles of association for a Jersey public company that is not listed on an exchange, incorporating restrictions on transfers of Ordinary Shares so that such shares on commencement of the Winding Up shall not be transferable without the written consent of the Directors or the Liquidators (as the case may be). A copy of the New Articles is available to Shareholders on request to the Company and will be available for inspection at the EGM. The Articles Resolution must be passed as a special resolution and will be passed if at least two-thirds of the votes cast (in person or by proxy) are in favour.
6. Action to be taken
You will find enclosed with this document a Form of Proxy for use in respect of the EGM.
Whether or not you intend to be present at the EGM, you are requested to complete and sign the Form of Proxy and return it, in accordance with the instructions printed on it, by post or (during normal business hours only) by hand to 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 10.00 a.m. on 16 December 2015. Completion and return of the Form of Proxy will not prevent you from attending the EGM and voting in person should you wish to do so.
7. Irrevocable Undertakings
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Pursuant to the terms of the Irrevocable Undertakings, the Independent Directors and Management Team other than Andrew Whalley and David Crockford (together holding 103,268 Ordinary Shares in aggregate, representing approximately 0.1% of the Company's issued Ordinary Shares as at 30 November 2015) have irrevocably undertaken to the Company on a several basis:
-- to vote and/or procure the vote of all of their respective holdings of Ordinary Shares in favour of the Resolutions; and
-- not to sell or transfer or otherwise dispose of any or all of their respective Ordinary Shares unless and until the Sale is completed or the Share Purchase Agreements are terminated,
and Andrew Whalley and David Crockford (together holding 449,102 Ordinary Shares in aggregate, representing approximately 0.43% of the Company's issued Ordinary Shares as at 30 November 2015) have irrevocably undertaken to the Company on a several basis:
-- to vote and/or procure the vote of all of their respective holdings of Ordinary Shares in favour of Resolutions 2, 3, 4, and 5 and to abstain from voting and/or procure the abstention from voting of their respective holdings of Ordinary Shares in relation to Resolution 1; and
-- not to sell or transfer or otherwise dispose of any or all of their respective Ordinary Shares unless and until the Sale is completed or the Share Purchase Agreements are terminated.
8. Factors taken into account by the Independent Directors in their reaching their
Recommendation
In arriving at their unanimous recommendation to Shareholders of the matters set out in this Circular, the Independent Directors are mindful that the UK renewables sector is likely to remain challenging for the foreseeable future and that the Group faces significant risks from further legislative changes.
They have therefore considered and taken into account the attractiveness and certainty of an all cash offer from a purchaser with sufficient cash resources to build out consented projects, preserving value from the 34.8MW of partially completed projects, which otherwise risk failure to qualify within the RO grace periods, the reliability and speed of execution able to be delivered by a purchaser which is familiar with the Group's business and assets and the relatively low disposal costs payable in the sale of the entire assets of the Company in a single transaction as opposed to a more expensive phased disposal program.
In assessing the Proposals the Independent Directors have also given consideration to the following, non-exhaustive, factors:
-- that BlackRock's valuation of the operational assets is consistent with the methodology adopted on previous asset disposals, having taken into account factors such as the elimination of the CCL, and inflation assumptions;
-- it is a requirement of BlackRock that the Rump Assets be acquired by Manco pursuant to the Manco Share Purchase Agreement;
-- the Proposals preserve value for Shareholders inherent in the Group's portfolio of consented assets by virtue of BlackRock being able to equity finance the estimated GBP47.2 million remaining construction cost to overcome delays resulting from the current lack of availability of project finance on terms acceptable to the Group;
-- BlackRock required limited due diligence and was therefore able to undertake an accelerated transaction to eliminate Shareholders' exposure to the cost drag to the Group that would result from a phased disposal programme;
-- the Proposals release the Group from its exposure to employment-related liabilities that would otherwise crystallise under a phased disposal programme;
-- the Proposals release the Company and the Group from exposure to other liabilities that may crystallise in a phased disposal programme including, but not limited to, a GBP4.6 million guarantee issued to Caterpillar in respect of the project financing of the Bio-Power plant at Whitemoor and other lease guarantee arrangements; and
-- pursuant to the Proposals the Management Team's entitlements under the LTIP will lapse.
In the Independent Directors' view, the prospects of achieving higher prices for the Group's business and undertakings as a result of a phased disposal program are outweighed by the downside risks and value leakage for Shareholders caused by these issues.
9. Recommendation
Entering into the Manco Share Purchase Agreement constitutes a related party transaction pursuant to the AIM Rules. The Independent Directors consider, having consulted with the Company's nominated adviser, Smith & Williamson, that the terms of the Manco Share Purchase Agreement are fair and reasonable insofar as the Shareholders are concerned.
The Independent Directors, who have been so advised by Smith & Williamson, are of the opinion that the Sale and the other Proposals are in the best interests of the Company and Shareholders as a whole. In providing advice to the Independent Directors, Smith & Williamson has taken into account the Independent Directors' commercial assessments. Accordingly, the Independent Directors unanimously recommend that you vote in favour of the Resolutions, as they have irrevocably undertaken to do in respect of their own, and to procure to be done in respect of their affiliates', beneficial holdings amounting in aggregate to 84,631 Ordinary Shares representing approximately 0.08% of the issued ordinary share capital of the Company.
Yours sincerely,
Mike Liston
Chairman"
Definitions
Admission the admission of Ordinary Shares
to trading on AIM pursuant to
the Option Exercise.
Aggregate Optionholder has the meaning given in paragraph
Loan 11 of Part 4 of this Circular.
AIM AIM, a market operated by the
London Stock Exchange.
AIM Rules the AIM Rules for Companies
published by the London Stock
Exchange, as amended from time
to time.
Articles the Articles of Association
of the Company at the date of
this
Circular.
Articles Resolution the resolution to be proposed
as a special resolution at the
EGM, being Resolution 5, to
approve the adoption of the
New Articles.
Asset Investment the agreement dated 1 December
Agreement 2015 between BlackRock
Investment Management UK Limited
(1) Renewable Energy
Generation Limited (2) and Helium
Miracle 184 Limited (3) relating
to provision of asset investment
services.
Asset Management the agreements between REG Windpower
Agreements Limited and the BlackRock Sale
Companies, relating to the operation
and management of certain wind
and solar projects.
BlackRock RI Income UK Holdings Limited,
registered in England and Wales
with registered number 09327491.
BlackRock Sale REG Mynydd Brombil Limited,
Companies REG Mynydd Brombil Holdings
Limited, Mendennick Solar Limited,
REG Burnthouse Farm Limited,
REG High Down PLC, Brackagh
Quarry Windfarm Limited, REG
Rodbaston Limited, REG French
Farm Limited, REG Barlborough
Limited, REG Tranche 1 Holdings
Limited, REG Tranche 2 Holdings
Limited, REG Orchard End Holdings
Limited, REG Cholwich Town Limited,
Mynydd Brombil Wind Farm C.IC.,
REG Mynydd Portref Limited,
REG Roskrow Barton Limited,
REG
High Sharpley Limited, REG Braich
Ddu Limited, REG Ramsey Limited,
REG High Pow Limited, REG Loscar
Limited, REG High Haswell Limited
and REG Orchard End Limited.
BlackRock Share the share sale and purchase
Purchase Agreement agreement dated 1 December 2015
between the Company (1) and
BlackRock (2) relating to the
sale and purchase of the entire
issued share capital of each
of the BlackRock Sale Companies.
Board the board of directors of the
Company.
Business Day a day (other than a Saturday,
Sunday or public holiday) on
which commercial banks are open
for general business in London
and Jersey.
Capita Asset Services Capita Registrars Limited, the
or Registrars registrars of the Company.
Caterpillar Caterpillar Financial Services
(UK) Limited registered in England
and Wales with registered number
02538373.
Caterpillar Finance the term loan facilities agreement
of up to GBP4,834,000 dated
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9 October 2014 entered into
between Living Power Limited
(1), certain original guarantors
(2) and Caterpillar Finance
as amended and restated from
time to time.
Climate Change the tax on UK business energy
Levy or CCL use, charged at the time of
supply.
Construction Management the construction management
Agreements agreements details of which
are set out in Part 2 of this
Circular.
CREST the relevant system (as defined
on the Regulations) in respect
of which Euroclear UK & Ireland
Limited is the Operator (as
defined in the Regulations).
CFD FIT feed-in-tariff contracts for
difference, the new renewable
incentive introduced under Electricity
Market Reform.
Circular this document.
Company Renewable Energy Generation
Limited, registered in Jersey
with registered number 104742.
Delisting the cancellation of the Ordinary
Shares in issue as at the Delisting
Date from trading on AIM.
Delisting Date the date on which the Delisting
takes place.
Delisting Resolution the resolution to be proposed
as a special resolution at the
EGM, being Resolution 2, to
approve the Delisting.
Directors the board of directors of the
Company.
EBT the Renewable Energy Generation
Employee Benefit Trust constituted
by a trust deed dated 22 August
2014 between the Company and
JTC Trustees Limited.
EBT Loan has the meaning given in paragraph
11 of Part 4 of this Circular.
EBT Agreement the agreement dated 1 December
2015 between the Company, JTC
Trustees Limited, in its capacity
as trustee of the EBT and REG
Holdings Limited relating to
the Option Exercise, the EBT
Loan and the sale to the trustee
of the EBT of Ordinary Shares
acquired as a result of such
Option Exercise.
EBT Trustee JTC Trustees Limited, being
the trustee of the EBT.
EGM or Extraordinary the Extraordinary General Meeting
General Meeting of the Company to be held at
10.00 a.m. on 18 December 2015,
notice of which is set out in
Part 6 of this document.
ESOS 1 the Renewable Energy Generation
Limited Share Option Plan 2007.
ESOS 2 the Renewable Energy Generation
Company Share Option Plan 2013.
FIT the small-scale feed-in tariff.
Form of Proxy the form of proxy enclosed with
this document, for use by
Shareholders in connection with
the EGM.
Government Her Majesty's Government of
the United Kingdom.
Group the Company and its subsidiaries
and subsidiary undertakings
from time to time.
Guernsey the Bailiwick of Guernsey.
Independent Directors Mike Liston, Nigel Le Quesne,
Malcolm Kennedy, John Scally
and Charlotte Valeur.
Irrevocable Undertakings the irrevocable undertakings
to vote in favour of the Resolutions
from each of the Independent
Directors and from Andrew Whalley
and David Crockford to vote
in favour of Resolutions 2,
3, 4 and 5 and to abstain from
voting in relation to Resolution
1.
Jersey the Bailiwick of Jersey.
Law Companies (Jersey) Law 1991
(as amended).
LEC levy exemption certificate.
Liquidators Philip Braun and Matthew Corbin
of BDO Limited.
Liquidator Resolution the resolution to be proposed
as a special resolution at the
EGM, being Resolution 4 to approve
the appointment of the Liquidators.
London Stock Exchange London Stock Exchange plc.
LTIP the Renewable Energy Generation
Limited Long Term Incentive
Plan 2013.
Management Team Andrew Whalley, David Crockford,
Ian Collins, Matthew Partridge,
Stephen Booth and Simon Wannop.
Manco Helium Miracle 184 Limited,
registered in England with registered
number 9890297.
Manco EBT the Helium Miracle 184 Limited
Employee Benefit Trust constituted
by a trust deed dated 27 November
2015 between Manco and JTC Trustees
Limited.
Manco Share Purchase the share sale and purchase
Agreement agreement dated 1 December 2015
between the Company (1) and
Manco (2) relating to the sale
and purchase of the entire issued
share capital of REG Holdings
Limited.
MW mega watt.
MWp mega watt peak.
New Articles the new articles of association
of the Company, proposed to
be adopted at the EGM.
Offer the offer for the business and
assets of the Group, as defined
in Part 1 of this Circular.
Optionholders holders of Options.
Options options granted under ESOS 1
or ESOS 2 (as the case may be).
Option Exercise the exercise by Optionholders
of some of their Options in
accordance with the invitation
made to them in the letter on
or about the date of this Circular
(as summarised at paragraph
11 of Part 4 of this Circular).
Option Exercise the Business Day following the
Date date of completion of the Sale.
Option Shares the Ordinary Shares to be issued
pursuant to the Option Exercise.
Ordinary Shares the ordinary shares of ten pence
each in the capital of the Company.
Pre-Distribution has the meaning given in paragraph
Matters 6 of Part 4 of this Circular.
Proposals the Sale, the Delisting, the
Winding Up, the appointment
of the Liquidators, the adoption
of the New Articles and the
Return of Cash.
PV photo voltaic.
Record Date 7.00 a.m. on the Delisting Date.
Regulations the Uncertificated Securities
Regulations 2001 (SI 2001 No.
3755), as amended from time
to time.
Related Parties Andrew Whalley, David Crockford
and Manco.
Related Party Agreements the Manco Share Purchase Agreement,
the Asset Investment
Agreement, the Construction
Agreements and the Asset Management
Agreements.
Related Party Transaction the sale to Manco of REG Holdings
Limited.
Renewables Obligation the financial mechanism by which
or RO the UK Government incentivises
the deployment of large-scale
renewable electricity generation
by placing a mandatory requirement
on licensed UK electricity suppliers
to source a specified and annually
increasing proportion of electricity
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