Infratil and Mercury announce intention to make full takeover offer for Tilt Renewables

Infratil and Mercury have announced their intention to make a full takeover offer for Tilt Renewables. Both companies are already shareholders in the company, holding or controlling 51.04% and 19.99% of Tilt Renewables' shares, respectively.

Tilt Renewables has approximately 11% market share of installed wind capacity in Australasia, with a total installed capacity of 637 MW across eight wind farms. The company also owns a development pipeline of more than 1,600 MW of planning approved projects covering wind, solar and storage technologies.

The offer price of NZD2.30 (US$1.51) represents a 24.3% premium to the closing share price of Tilt Renewables on 11 May 2018, being the last trading day before Mercury acquired a 19.99% stake in Tilt Renewables from TECT Holdings, a company 100% owned by the Tauranga Energy Consumer Trust, for NZD2.30 per share.

TECT, the third largest shareholder in Tilt Renewables which continues to hold 6.81%, granted Mercury an option over the remainder of its shares in May 2018. Following the offer becoming fully unconditional Mercury has agreed to exercise the option to acquire those shares in a manner which complies with the takeovers code, with Infratil ultimately to become the holder of those shares. The agreement between Infratil and Mercury, combined with the shares covered by the TECT option, aggregates to 77.84% of Tilt Renewables shares.

NZD208.54 million (US$136.76 million) of funding is required to acquire all of the shares that Infratil and Mercury do not currently hold or control at the offer price. Infratil has sufficient funding capacity and intends to fund the takeover offer, and any near-term Tilt Renewables development projects, through the use of existing cash and debt facilities available to it.

The only substantive condition of the offer is approval from the Australian Foreign Investment Review Board (FIRB). There is also a 50% acceptance condition that will be satisfied promptly after the offer is launched. There are some other customary restrictive conditions that Infratil and Mercury currently intend to waive or declare as satisfied (to the extent permitted by law) once the FIRB condition is satisfied. Payments would commence within seven days of the approval.

UBS is acting as financial adviser to Infratil. Buddle Findlay is providing legal advice.