Infigen questions UAC takeover
Infigen Energy has cast doubt over a $777m takeover bid from UAC Energy, saying the move does not appear to be fully funded.
Infigen Energy has cast doubt over a $777m takeover bid from UAC Energy, saying the move is 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 an 80c per 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 on the bid.
The bid was described as “opportunistic” after Infigen’s share price crashed by more than half during February and March, along with steep falls in Australian energy prices from the onset of COVID-19.
It was unclear whether UAC’s offer was 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 to refinance Infigen’s debt if 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 a key role in the success of UAC’s bid.
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.
Its shares closed up 0.6 per cent on Thursday, at 81c each.