Last checked at 7 Mar 2016 07:00
Trading Emissions PLC
7 March 2016
Trading Emissions PLC
Update on Carbon Arbitrations & Distributions
Trading Emissions PLC (the "Company") announces that it has been informed of the termination of a further arbitration in respect of a claim of approximately €5.6 million lodged by a subsidiary of Yunnan Dianneng (Group) Holding Co. Ltd ("Dianneng"). The tribunal also awarded TEP a total amount of HK$289,105.37 in respect of TEP's legal costs, the tribunal's fees and the administrative fees of the Hong Kong International Arbitration Centre ("HKIAC").
This announcement should be read in conjunction with the announcements made by the Company on 4 September 2015 and 14 September 2015.
Background
In March and June 2014, the Company received notices of arbitration in respect of claims that challenged the amendments that had been made to, in total, six Emissions Reductions Purchase Agreements ("ERPAs"), each between TEP and a project company owned by Dianneng.
Each claimant is a special purpose company, which operates a hydro-power project in Yunnan province, and is counterparty to an ERPA with TEP. These companies are subsidiaries of Dianneng, which is ultimately controlled by the State Power Investment Corporation ("CPI"), one of China's largest energy companies. A subsidiary of CPI is listed on the Stock Exchange of Hong Kong.
The associated claims originally amounted to, in aggregate, approximately €24 million, but were subsequently revised by Dianneng to an aggregate of approximately €26 million.
Arbitration processes in respect of four of the six claims, amounting to approximately €20 million, have now been terminated or concluded with awards issued in the Company's favour.
The arbitration processes continue in respect of the remaining two claims, amounting to approximately €6 million.
Each of the disputes is subject to arbitration proceedings in Hong Kong under Hong Kong law. TEP continues to believe that the basis of all of the claims is spurious and misconceived and that the quantum of the claims is in any event incorrect.
Each of the claims lodged by Dianneng's subsidiaries is based on substantially similar ERPA contractual terms and arguments. However, Dianneng's manipulation of the rules applicable to arbitrations in Hong Kong resulted in the HKIAC appointing different sole arbitrators to preside over each of four of the claims. This has resulted in an inefficient and unnecessarily expensive resolution process for these disputes, with the inherent risk that the tribunals might render inconsistent decisions.
Distributions to Shareholders
The Board expects that the conclusion and/ or termination of the four arbitrations to date will permit the Company to resume distributions to Shareholders. Absent further claims against the Company, the Board intends to announce the details of a distribution to Shareholders before the end of March 2016 in conjunction with the publication of the Company's Interim Financial Statements for the period ended 31 December 2015.
Enquiries:
FIM Capital Limited +44 (0)1624 681250
(Philip Scales)
Liberum Capital Limited +44 (0)20 3100 2222
(Steve Pearce/ Tom Fyson/ Josh Hughes)