Windlab receives $68m takeover offer from Federation Asset Management

Windlab Federation Asset Management Holdings ASX WND
Federation Asset Management, an 18.7% shareholder of Windlab, has made an offer to acquire the remaining issued share capital in the struggling wind farmer.

Renewable energy investor Federation Asset Management Holdings could takeover Windlab (ASX: WND) after lobbing a $68 million bid for the challenged wind farmer.

Windlab today confirmed to the market it has received a non-binding and indicative proposal from Federation to bump up its current stake from 18.7% to full ownership of the company.

Federation’s offer is to acquire 100% of Windlab’s issued share capital by way of a scheme of arrangement at an offer price of $1.00 per share in cash.

The offer represents a premium of 38.9% to Friday’s closing price of Windlab shares and 40.1% to the 30-day volume weighted average price.

Windlab stated in today’s announcement that its directors intend to recommend the offer, believing it presents shareholders with an opportunity to realise their investment in Windlab at a significant premium.

“Subject to an independent expert concluding that the proposal is in the best interests of shareholders not associated with Federation and in the absence of a superior proposal, the directors of Windlab intend to unanimously recommend the proposal to Windlab shareholders upon entry into a binding agreement to implement the proposal,” the company stated.

Process deed

The takeover proposal follows earlier discussions and due diligence undertaken by Federation late last year when it first acquired its major stake in Windlab.

The offer is non-binding and remains subject to conditions including the completion of satisfactory due diligence, required regulatory, court and shareholder approvals, and entering into mutually acceptable transaction documentation (including a scheme implementation agreement).

Windlab and Federation have entered into a process feed, granting the latter a period of exclusivity until 21 February to complete its due diligence and negotiate a scheme implementation agreement and other transaction documents.

The exclusivity period may be extended by a further five days to allow for the completion of documentation, subject to certain conditions being satisfied.

During this exclusivity period, Windlab has agreed to provisions including “no shop, no talk and no due diligence” restrictions.

Industry challenges

Winlab first listed on the ASX in mid-2017 but its stock halved in price in November 2018 after losing its only investor in the Lakeland wind farm project in Queensland due to grid connection risks.

The company’s stock has struggled to recover since and last August, it launched a strategic review to “to close the value gap between the price of Windlab’s listed securities and the board’s view on [its] underlying value”.

In Windlab’s announcement of the review, it said it would consider the introduction of potential capital partners as well as alternative ownership models.

While Windlab states it is developing more than 50 renewable energy projects around the world, totalling more than 7,500 megawatts of potential capacity, the company has faced challenges in a difficult wind energy market.

In November, the company also announced it was taking the engineering procurement and construction contractor for its Kennedy Energy Park project to court after major delays.

According to Windlab, the project was already running 13 months late in November and the contractor – a joint venture between Vestas Wind Systems and Quanta Services – then forecast it would not reach full commercial operations for a further four to five months.

The energy project began limited operation in August 2019; however, Windlab claimed the contractor has not been able to deliver compliant generator performance standard model to allow registration of the project as a generator, which is needed before full commercial operations can begin.

Then in December, Windlab confirmed one of the initial outcomes of its strategic review would be to exit the North American market.

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