Infigen Energy questions UAC Energy takeover bid
Infigen says UAC’s $777m takeover bid is opportunistic, does not appear to be fully funded, and raises change of control issues.
Infigen Energy has cast doubt over a $777m takeover bid from UAC Energy, saying it’s opportunistic, does not appear to be fully funded and raises problematic change of control conditions.
UAC, which bought a 12.82 per cent stake in Infigen, lobbed a 80c a share offer on Wednesday for the clean energy operator which represents a 43.4 per cent premium to the stock’s one-month average price.
While Infigen’s board is still considering its formal response to the buyout proposal, it flagged a number of issues which cast doubt over its support for the bid and told shareholders to take no action.
The bid was described as “opportunistic” after Infigen’s share price crashed by over half through February and March along with steep falls in Australian energy prices from the onset of COVID-19.
It was unclear if UAC’s offer is fully funded given conditions laid out by the suitor over change of control consequences for its debt facilities which may indicate UAC does not have sufficient funding in place to refinance Infigen’s debt should that be required.
A number of conditions including FIRB approval, conduct of business and a material adverse change clause were also raised by Infigen.
A “highly prescriptive” set of conditions relating to change of control and disclosure would also require waivers or releases from counterparties to contracts which may be difficult for Infigen to achieve.
“It may also not be in the interests of Infigen to disclose publicly provisions of its contracts with third parties. Therefore, these conditions may never be capable of being satisfied,” Infigen said.
Infigen’s largest shareholder, The Children’s Investment Fund, owns 33 per cent of the company, handing it an influential role in the success of UAC’s bid.
Its shares were up 0.9 per cent to 81c after jumping 36 per cent on Wednesday.
UAC is 75 per cent owned by AC Energy Group, a subsidiary of the $14bn conglomerate Ayala Corporation which is listed in the Philippines. The other 25 per cent is owned by Asian developer UPC Renewables, an Australian venture between AC Energy and UPC which is working on a host of solar, battery and pumped hydro projects.
Infigen owns seven wind farms in Australia and has about 70 per cent of its output contracted over the next three years.
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