NZX Announcement
3 August 2017
For Immediate Release
NZ Windfarms Announces Prospective $17.3m Major Acquisition and other matters
NZ Windfarmd Ltd (NWF) today advises it has entered into a Sale and Purchase
Agreement for the acquisition of significant transmission assets at its Te
Rere Hau Wind Farm near Palmerston North. The Company currently leases the
assets from line company Powerco Transmission Services Ltd.
Rodger Kerr-Newell, NZ Windfarms'' Chairman said, "The new Board made a
commitment to shareholders at the last AGM that effort would be focused in a
number of areas including addressing the lease and obtaining control of
assets critical to the Company''s operations. We have undertaken our own
analysis and engaged third party advisers to ensure we are paying a fair
price for the assets and we believe we are. The acquisition has other
positive effects on the Company such as providing control across both
generation and transmission assets to the injection node. It will also
improve the Company''s free cash flow allowing that cash to be used for other
purposes."
"We are delighted that we have been able to deliver on the promise to address
this lease and we continue to work on all the other initiatives that we have
outlined to shareholders," said Kerr-Newell.
The total cash consideration payable to acquire the assets is $17.3m. The
assets include around 20km of dual 33kV transmission circuits, on-farm
reticulation cabling, a switchyard, 97 transformers (one per turbine),
relevant licenses and easements and other ancillary assets and spares. The
Company has leased these assets since the later build stages of the wind farm
in 2008, and the lease arrangements, with escalating lease costs, were to
remain in place until termination in 2028.
The acquisition is subject to certain conditions precedent including:
o The Company undertaking a due diligence investigation of the assets;
o The Company raising sufficient finance to fund the purchase price. To
this end, the Company is well advanced towards securing Bank funding for
approximately $12.3 million;
o The assignment or creation of certain property rights;
o Shareholder approval of the proposed acquisition. It is anticipated
that a meeting of shareholders will be held to consider the acquisition
during the course of September, and
o Standard settlement conditions commensurate with a commercial
transaction of this nature.
Settlement of the acquisition is expected to occur in late September, or
early October 2017.
It is anticipated that the Company will fund the purchase utilising a
combination of its existing cash reserves of circa $5 million, together with
bank funding of circa $12.3 million. The Board anticipates that the bank
funding will be committed for a three year term, with the loan repayments
structured to be amortised over 13 years, with equal annual principal
repayments of around $950,000. Total servicing cashflows will be
approximately $700,000 less per annum in the first 12-month period than the
existing lease arrangement. Going forward, interest costs will fall by
approximately $60,000 per annum as principal is paid down. This termination
will also free up further funds.
This acquisition will also positively affect NZ Windfarms value in use test
of assets as these assets will no longer be leased and can be more
cost-efficiently utilised through ownership. The Company will work through
this issue and advise the result in due course.
CEO John Worth notes that the Company has worked closely with Powerco''s
leadership team in the purchase and acknowledges its strong cooperation and
spirit in this complex transaction. "This deal is illustrative of the
Company engaging actively in the electricity industry to improve its future."
Other matters
NWF also advises that it received an unrelated unsolicited approach from a
third party corporate expressing an interest in either acquiring its assets
or conducting a takeover of the company. The approach was from a credible
party. This approach at no time constituted a formal bid as defined under the
NZX Takeovers Code and was incomplete in a number of material aspects.
Discussions were terminated as the parties were unable to agree on price.
Board Chairman Rodger Kerr-Newell notes that, "The Board took into
consideration work-streams underway including the cost out program and other
initiatives in progress and decided that the interest did not match the
Board''s view on value as the company re-shapes itself to take effective
advantage of the considerable assets it has. We will not comment further on
this approach."
For further information contact:
John Worth
CEO
+64 21 800 310
End CA:00304974 For:NWF Type:GENERAL Time:2017-08-03 14:21:07