Energy Developments Limited (ASX: ENE) Thursday, 24 December 2009 For Immediate Release

Transcription

1 Energy Developments Limited (ASX: ENE) Thursday, 24 December 2009 For Immediate Release ASX Release First Supplementary Target s Statement Energy Developments Limited (ASX: ENE) attaches, by way of service pursuant to section 647(3) of the Corporations Act 2001 (Cth), ENE s First Supplementary Target s Statement dated 24 December 2009 in relation to the off-market takeover offer by Greenspark Power Holdings Limited for all the fully paid ordinary shares in ENE.... For additional information please contact: Glen Marshall Company Secretary Energy Developments Phone: About Energy Developments: ENE is an international provider of renewable energy and low greenhouse gas emission energy. The Company currently owns and operates a diversified international portfolio of power stations in Australia, the United States, Europe and the United Kingdom, with a total capacity of approximately 600 MW from a range of fuel sources including landfill gas, waste coal mine gas, natural gas and liquefied natural gas. In the year ended 30 June 2009, in its worldwide operations, the Company produced approximately 2,800 GWh of clean energy, and captured and utilised greenhouse gases estimated at 9.7 million tonnes of carbon dioxide equivalent, akin to removing 2.8 million cars from the road. In Australia, the Company captured and utilised waste methane to produce approximately 2,000 GWh of clean energy, and abated over 6.2 million tonnes of carbon dioxide equivalent, comparable to removing approximately 1.6 million cars from the roads.

2 First Supplementary Target s Statement Building Logan Road PO Box 4046 Eight Mile Plains Qld 4113 Australia Main Tel Main Fax This document is a supplementary Target s statement under section 644 of the Corporations Act 2001 (Cth). It is the first supplementary Target s statement (First Supplementary Target s Statement) issued by Energy Developments Ltd ABN (ASX: ENE) in relation to the off-market takeover offer for all the ordinary shares in the capital of ENE by Greenspark Power Holdings Ltd, a limited liability company incorporated in Jersey (company registration no ). This First Supplementary Target s Statement supplements, and should be read together with, ENE s Target s statement dated 14 December 2009 (Original Target s Statement). 1 Independent Expert update Please see the attached letter provided by the Independent Expert. 2 Defined terms Unless the context otherwise requires, terms defined in the Original Target s Statement have the same meaning in this First Supplementary Target s Statement. 3 Other notices A copy of this First Supplementary Target s Statement has been lodged with ASIC. Neither ASIC nor any of its officers take any responsibility for its contents. This First Supplementary Target s Statement has been approved by a resolution passed by the directors of Energy Developments Ltd. 24 December 2009 Signed for and on behalf of Energy Developments Ltd By Bruce Brook, Chairman page 1

3 The Directors Energy Developments Limited 2404 Logan Road Eight Mile Plains Qld December 2009 Subject: Takeover offer from Greenspark Power Holdings Ltd Dear Directors 1 Further to ASIC s request for clarification, we provide the following additional information with respect to our independent expert s report dated 2 November 2009 (hereinafter referred to as IER) and our updated IER dated 11 December 2009 (hereinafter referred to as our Updated IER). Electricity and Renewable Energy Certificate (REC) prices 2 As set out in our IER: electricity pricing is set at contracted rates until the end of those contracts. Prices are then assumed to revert to spot, based on industry expert forecasts REC prices are based on forecasts by industry experts, plus or minus 15%. 3 With respect to wholesale electricity prices: (d) over 90% of Energy Developments expected sales revenue (excluding green credits) for FY10 is under contract, and accordingly, movements in market spot prices in FY10 are of limited relevance in Australia, over 70% of Energy Developments electricity sales revenue (excluding green credits) is forecast to be under contract up until FY16. As the large majority of Energy Developments electricity sales revenue in the short to medium term is contracted, forecast spot electricity prices are not considered to be a key driver of Energy Developments profitability in the short to medium term as the contractual prices are commercially sensitive, they cannot be publicly disclosed spot wholesale electricity prices in the DCF valuation models are forecast to increase in Australia at between 4% and 6% per annum (on average) over the forecast period to 2030 (based on forecasts prepared by industry experts).1 These growth rates reflect significant increases in wholesale electricity prices in the short-term due to the proposed emissions trading scheme. 1 These electricity price increases vary by region and for peak / off-peak periods, and are also seasonal. Liability limited by a scheme approved under Professional Standards legislation

4 4 REC prices have exhibited significant volatility in recent years as noted in Greenspark s Bidder s Statement. This volatility reflects, in part, uncertainties associated with the proposed emissions trading scheme and changes in government policy. 5 In the DCF valuation model we have assumed that REC prices: are $30 initially (which were broadly consistent with spot prices at the time) increase to over $50 in real terms in 2011 (based on industry expert forecasts) decline significantly thereafter (to around $11 to $12 in real terms by 2030) due to the increase in supply of low emission electricity generation. As electricity prices increase (as they are expected to do under the proposed emissions trading scheme) certain renewable technologies become economic even without RECs, and more renewable generators will become economic at lower REC prices. As more REC s are produced in such circumstances, the price of RECs will fall. Limitation and reliance on information 6 We advise that prior to signing our updated IER we reviewed Energy Developments latest internal management financial results which confirmed that there had been no material change in Energy Developments profitability, financial position or future prospects between the date of our IER and Updated IER. Further: (d) (e) the period of time between our IER and our Updated IER was relatively short, being only 36 days Energy Developments is subject to the continuous disclosure requirements of the ASX, whereby Energy Developments must keep the market informed of events and developments that may have a material effect on the price of its securities as they occur. In relation to this, we note that at the Company s 2009 Annual General Meeting on 5 November 2009, Energy Developments stated that they expect earnings for the full year to September 2010 to be at the low end of the $135 million to $145 million EBITDA range forecast provided in August. This was confirmed on 30 November 2009 when Energy Developments announced to the ASX that it expected to achieve normalised EBITDA in excess of $135 million in the year ending 30 June 2010 (FY10) the value of Energy Developments shares reflects the long term earnings and cash flow generating ability of the Company we note that there were not any changes in long term interest rates (e.g. 10 year government bond rates) or exchange rates between the date of our IER and Updated IER which would have a material impact on our valuation range we believe that the information provided by Energy Developments is reliable, complete and not misleading and have no reason to believe that material facts have been withheld. R:\Franklin\SALT\Independent Expert\ ASIC Update\ Letter.docx 2

5 Conclusion 7 As set out in our IER of 2 November 2009 and our updated IER of 11 December 2009, LEA have assessed the value of Energy Developments shares on a 100% controlling interest basis at $3.17 to $4.09, and accordingly, in LEA s opinion, the Greenspark offer is neither fair nor reasonable. Yours faithfully Craig Edwards Authorised Representative Grant Kepler Authorised Representative R:\Franklin\SALT\Independent Expert\ ASIC Update\ Letter.docx 3