The proxy battle for the right to sell renewable power developer Western Wind Energy is moving into the final stretch, with the dissident shareholder that wants to take over the board filing a letter to shareholders that accuses management of an inability to run a sale process, and a potential buyer moving into position.
The fight over Western Wind erupted into the open in the middle of summer, and immediately got nasty. On July 30, the company announced a plan to find a buyer. Shortly after that, shareholder Savitr Capital LLC unveiled its plan to install a new board that Savitr said would be better placed to sell the company. The company shot back that Savitr and its leader, Andrew Midler, was being “hysterical and dishonest.”
Western Wind argues it “has already made significant progress towards a sale – there is no turning back,” with a data room opened, and many potential buyers contacted. Bidding is set to move on to another round with “detailed discussions with management with a view to finalizing a definitive binding proposal regarding the acquisition of the corporation and its assets.”
Not so fast, Savitr says in its dissident letter to shareholders, to be mailed on Wednesday.
“We lack confidence in the current board and management to run a credible sale process that will result in the maximization of shareholder value,” Savitr wrote. “Do not be fooled by Western Wind’s efforts to convince you that they have a unique and magical advantage in running a sale process. They do not. What they do have is a history of failing to deliver on promises and destroying shareholder value.”
Savitr points out that the company did not capitalize on a potential sale to Algonquin Power & Utilities Corp. last year, causing the shares to plunge as investors were disappointed when Algonquin backed off.
And now, in the middle of this, who shows up as a potential kingmaker but Brookfield Renewable Energy Partners, an arm of Brookfield Asset Management Inc.?
Brookfield acquired 16 per cent of Western Wind from Goodman & Co., giving it a big role to play at the Sept. 25 annual meeting.
What’s Brookfield’s angle? The company says the purchase, which was announced Aug. 29, was for investment purposes only, in light of Western Wind’s sales plan.
At the very least, Brookfield has put a floor under the price for the bidding by paying $2.25 a share to Goodman, and providing a guarantee that if Western Wind is sold to anybody for more than that, Goodman will get a share of the upside.
Brookfield could be in for just a quick flip. But buying a toehold from a motivated seller and eventually grabbing a whole company is certainly in the Brookfield playbook. Nobody should be surprised if Brookfield was the eventual buyer, given its focus on renewable power sources.