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Infratil, Mercury partner for $208M Tilt takeover

Wednesday 15th August 2018

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Mercury NZ has partnered with Infratil in a $208.5 million offer for the shares in Tilt Renewables they don’t already own.

The pair have formed an unincorporated joint venture and plan to offer $2.30 each for shares in the Melbourne-based renewable generation developer. That is 8 percent more than their closing price on the NZX yesterday and 24 percent more than in early May when Mercury acquired an almost 20 percent stake in the company.

Mercury chief executive Fraser Whineray said wind and solar are the preeminent long-term technologies for renewable generation development globally. It already has a solar business in New Zealand and consented wind sites and expanding into Australia’s faster-growing renewables market through Tilt makes sense.

“Tilt is well established in Australia and New Zealand, in terms of its platform, expertise and development pipeline of wind and solar generation. It has a robust portfolio of operating wind farms, a strong management team with a proven track record and consented renewable generation projects which it can bring to market when conditions are right,” Whineray said in a statement to NZX.

Tilt shares jumped 12 cents to $2.25. They earlier reached $2.27 – an 18-month high.

Infratil and Mercury control 71 percent of Tilt now. Mercury bought its current 19.9 percent interest from the Tauranga Energy Consumer Trust in May – also at $2.30 a share. It has an option to buy the trust’s remaining 6.8 percent interest at the same price.

That gives the partners an effective aggregate holding of 77.8 percent. Effecting the takeover now gives minority holders the chance to get out at a modest premium before Tilt seeks funds for a potential A$600 million development at Dundonnell in Victoria.

Tilt – split out of Trustpower in October 2016 – operates the Tararua and Mahinerangi wind farms in New Zealand. It has consented development options at Mahinerangi, Waverley on the southern Taranaki Coast, and Kaiwera Downs in Southland.

In Australia, it has five operating wind farms – including the just completed 54 MW Salt Creek project in Victoria – and continues to add to its string of other wind, solar and battery development options.

The company previously signalled it will need to raise about A$300 million of new equity for the 80-turbine, 336 MW Dundonnell development. It is offering the output to the Victorian state government under its renewables auction scheme.  

Infratil noted the planned equity raising is equivalent to about 45 percent of Tilt’s current equity value.

Should the Dundonnell bid succeed, shareholders will be required to contribute a significant amount of new equity relative to their existing shareholding or face dilution, Infratil said.

Under the terms of the deal, Mercury will keep its stake in Tilt at 20 percent. Once the offer is unconditional it will exercise its option to acquire the remaining TECT shares, but they will ultimately be owned by Infratil.  

Infratil says it will fund the NZ$208.5 million needed for the takeover and has the capacity to fund any near-term Tilt development projects.

Mercury shares fell 1.5 cents to $3.35 earlier today. Infratil stock was barely changed at $3.395.


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