Western Wind Seeks Sale at Double Share Price Amid Proxy Row

September 13, 2012 by  
Filed under Green Energy News

Western Wind Energy Corp. (WND), the
Canadian renewable-energy developer fighting a dissident
shareholder, is seeking to sell itself for almost twice the
current share price and has 16 potential buyers.

Western Wind expects a buyer to pay between C$3.75 ($3.84)
and C$4.50 a share, Chief Executive Officer Jeff Ciachurski said
in a telephone interview. The Vancouver-based company rose 1.6
percent to C$2.49 at the close in Toronto. The shares have
doubled since the company said it was for sale July 29. It
issued a statement today disclosing the number of potential
buyers engaged in due diligence.

The company is countering efforts by Savitr Capital LLC to
control the sale process and replace the board. Savitr manages
3.2 million shares, or 5 percent of Western Wind, Andrew Midler,
managing member of the San Francisco-based fund, said in an
interview. Shareholders have until a Sept. 25 meeting to voice
support for either Savitr’s motion or the current management,
the company said in a proxy.

Brookfield Renewable Energy Partners LP (BEP-U), which owns 16
percent of Western Wind, is “obviously interested,” John McIlveen, an analyst at Jacob Securities Inc. in Toronto, said
in a phone interview. Brookfield said Aug. 28 it had acquired
the stake, about 10.7 million Western Wind shares, for C$2.25
each from an unidentified institutional investor. Western Wind’s
operating assets are adjacent to wind properties that Brookfield
owns north of Los Angeles.

Upside Provision

The deal includes a so-called upside provision that
requires Hamilton, Bermuda-based Brookfield to pay “an
additional amount” to the institutional investor if Western
Wind is acquired for a higher price, according to a Western Wind
filing.

“You don’t do that if you’re just talking about a
portfolio investment. They did that because they intend to
bid,” said McIlveen, who rates Western Wind a buy and doesn’t
own the stock.

A buyer may pay at least C$2.50 a share for the company, he
estimated. “After that it really depends upon what valuation
you put on the assets that aren’t in production.”

Acquisition Offer

Andrew Willis, a Brookfield spokesman, declined to say in a
phone interview whether Brookfield will make an offer for
Western Wind and said his company hasn’t decided how to vote on
the Savitr motion.

Western Wind operates wind farms in California and Arizona,
with capacity of about 165 megawatts, and is developing
additional projects in the two states and and in Puerto Rico. An
acquisition offer of C$2.50 a share from Algonquin Power
Utilities Corp. (AQN) fell through in October.

Savitr said it would create a “credible sale process”
compared with Western Wind’s “history of empty promises”
regarding a company sale, in a Sept. 11 letter to shareholders.

Western Wind “rebuffed” Algonquin Power Utilities in
October 2011 after it showed interest in acquiring the company,
didn’t act after hiring advisers to conduct a strategic review
of options last year and following criticism, “cobbled together
a makeshift sale process in July,” according to the letter.

“If we thought, as shareholders, that we could trust the
current board to run a legitimate process and sell the company,
we would not be doing this,” Midler said in a phone interview,
adding that Savitr has not previously been an activist investor.

‘Credible Process’

Savitr can’t get the best price for the company because it
doesn’t understand the business and may undervalue projects in
development, Ciachurski said in an interview yesterday.

“We’re the only success story in the market since 2009,”
Ciachurski said. “It’s been nothing but decimation out there.”

Ciachurski is “committed to a sale,” he said. “But
getting done at the right price isn’t going to happen with
dissidents.”

Ciachurski will earn a bonus of at least C$2 million if a
buyer pays C$3 a share or more for the company, according to an
Aug. 24 filing with the Canadian Securities Administration.

Bidders in addition to Brookfield could include other
Canadian renewable power firms and any of California’s five
major and several smaller utilities, who would benefit from
Western Wind’s U.S. tax credits, McIlveen said.

It’s a “very tough call” to assess whether shareholders
will back management or Savitr, the analyst said.

“With the Savitr group, you don’t have that conflict that
you have to get over $3 a share.”

To contact the reporters on this story:
Jeremy van Loon in Calgary at
jvanloon@bloomberg.net;
Rebecca Penty in Calgary at
rpenty@bloomberg.net

To contact the editors responsible for this story:
David Scanlan at
dscanlan@bloomberg.net;
Susan Warren at
susanwarren@bloomberg.net

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