Last checked at 17 Mar 2010 18:20
17 March 2010
Renewable Power & Light plc
Response to Thalassa Announcement & Requisition of General Meeting
The board of Renewable Power & Light plc ("RPL" or the "Company") notes the announcement made today on 17th March 2010, by Thalassa Holdings Limited (the "Thalassa Announcement") and confirms that it received after business hours yesterday on 16th March 2010 at its registered office a letter enclosing the requisition of general meeting and members' statement of Thalassa Holdings Limited and CityPoint Holdings Limited (together, "Thalassa") reproduced in the Thalassa Announcement.
The Company will make a further announcement in due course but feels compelled initially to comment on what the board believes to be certain inaccuracies and misleading statements and omissions contained in the Thalassa Announcement.
The Competing Offer
The Thalassa Announcement states that Thalassa's proposal to replace the board of RPL was reached following the Company's general meeting on 15 February 2010, "most importantly because the board of RPL failed to inform shareholders that they had received, prior to that general meeting, a competing and substantially higher offer for RPL's US subsidiary, at a 100,000% premium to the $1 price that the board of RPL was recommending" (the "Competing Offer").
The Company can confirm that it received a letter from Thalassa which contained the Competing Offer made by Thalassa on 12 February, the last business day prior to the general meeting held on 15 February. The Competing Offer was duly considered by the board in accordance with its fiduciary duties.
The headline consideration in the Competing Offer was stated to be "not less than $1,001"; hence the factual, but sensationalist, reference to the "100,000% premium" in the Thalassa Announcement, but which in the board's view misleads shareholders as to the true economic effect of the Competing Offer when compared to the True North transaction. This proposed $1,000 increase in the cash consideration was only a fraction of the amount the Company would have had to incur in considering, negotiating, executing and potentially seeking shareholder approval for the Competing Offer.
Moreover, the Competing Offer was not legally binding and subject to certain conditions. Therefore the statement in the members' statement that the Competing Offer was "on exactly the same terms" as the transaction with True North is false and misleading. The terms of the True North transaction included detailed provisions on how existing contractual liabilities of RPL Holdings were to be dealt with, which was the key aspect of the transaction, not the value of the cash consideration.
Taking into account the significant additional costs and time lag involved, as well as the uncertainty of the outcome of the Competing Offer, the RPL board concluded that the Competing Offer was not in the best interests of shareholders as a whole. The board did not therefore breach in any way its fiduciary duties as directors, contrary to the assertion made in the members' statement.
Adoption of New Investing Policy
The Thalassa Announcement contains a resolution purporting to approve a new investing policy in generic terms and which does not comply with the AIM Rules. The AIM Rules provide that the investing policy must be sufficiently precise and detailed to allow the assessment of it, and, if applicable, the significance of any proposed changes to the policy. It must contain at a minimum:
·; assets or company in which it can invest;
·; the means or strategy by which the investing policy will be achieved;
·; whether such investments will be active or passive and, if applicable, the length of time that investments are likely to be held for;
·; how widely it will spread its investments and its maximum exposure limits, if applicable;
·; its policy in relation to gearing and cross-holdings, if applicable;
·; details of investing restrictions, if applicable; and
·; the nature of returns it will seek to deliver to shareholders and, if applicable, how ling it can exist before making an investment and/or before having to return funds to shareholders.
As an AIM company itself, Thalassa could reasonably be expected to be aware of these requirements. Nevertheless no mention is made in the Thalassa Announcement that a further shareholders' meeting would need to be convened for this purpose. This is, in the board's view, misleading given Thalassa implies that it would be beneficial for the current board (other than Tim Hunstad) to resign in order to save the Company and its shareholders the time and expense of convening a meeting.
The Company will therefore be requesting from Thalassa further details of their proposed investing policy prior to convening the meeting as set out in the requisition, in order that it contains sufficient information to comply with the AIM Rules and in order to save the costs of having a further meeting of shareholders to propose a new investing policy.
Timing & Thalassa Delay
As mentioned in the Company's circular to shareholders posted on 27 January 2010 and its announcement on 15 February 2010, if the Company's investing policy is not implemented prior to 19 August 2010 (being 12 months from the date of shareholder approval of the Company's existing investing policy) then trading in the Company's ordinary shares on AIM will be suspended in accordance with AIM Rule 40. If following suspension of the ordinary shares in accordance with AIM Rule 40, the ordinary shares have not been re-admitted to trading on AIM, within a further six months, the admission of the ordinary shares to trading on AIM will be cancelled. The adoption of a new investing policy does not restart this timeline. The Company believes that the failure to mention whether it is capable of implementing the new investing policy within the time frame mandated by the AIM Rules is, in the board's view, an important omission from the Thalassa Announcement.
The board have been aware of this impending deadline under AIM Rule 40 and the need for the Company to consider proposals from Thalassa for a new investing policy as soon as possible following the voting down of the True North transaction in order to preserve shareholder value as every month with no progress made towards implementing a shareholder approved investing policy reduces available time and resources. Accordingly, as set out in the Company's announcement on 15 February, a letter to Thalassa on 19 February and thereafter, the Company has made numerous requests of Thalassa and its advisers to provide proposals for a new investing policy and invited Mr Soukop to meet with the board following its board meeting taking place on 18 March 2010.
Prior to the Thalassa Announcement, the board were led to believe by Thalassa's advisers that substantive proposals would be forthcoming on a new investing policy and that Mr Soukop would accept the Company's invitation.
It now appears to the board that this was not the case. The Company notes in this regard the (incorrect) date on the members' statement as being 19 February 2010 (rather than 15 March 2010). It is clear from the Thalassa Announcement that its course of action has been known since immediately following the general meeting on 15 February 2010. The rationale for this delay is unclear.
The Board is concerned that the extensive delay in approving and implementing a new investing policy may lead to a point when the AIM Rules will no longer apply to the Company, to the detriment of minority shareholders in the Company.
A further announcement will be made as and when appropriate.
For further information, please contact:
Renewable Power & Light plc
Timothy Hunstad Telephone: + 1 952 746 0393
Grant Thornton Corporate Finance - Nomad and Financial Adviser
Gerald Beaney Telephone: +44 20 7383 5100