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Tilt’s independents belatedly urge holding out against Infratil

Tilt Renewables’ independent directors say it looks like Infratil’s $2.30 per share takeover bid will fail to get to 90 percent acceptances and that remaining shareholders should hold out for a better offer.

“Given the acceptances to date, it is unlikely that the joint venture will reach the 90 percent compulsory threshold with its current offer,” said Fiona Oliver, the chair of the independent committee of directors.

Although Infratil and Mercury are in a JV which is making the now unconditional offer valuing Tilt at $720 million, Infratil will be the effective owner of any shares sold into the offer because the JV restricts Mercury to its current 19.9 percent stake.

“The offer remains inadequate and has become increasingly inadequate, given the positive announcements that have been made by Tilt Renewables since the offer was made,” Oliver said.

Tilt shares have not traded below $2.30 since Nov. 1 and have been trading in a narrow band between that price and $2.32 since.

The independent valuation by Northington Partners published in September valued Tilt’s shares at $2.56-$3.01, making the company worth $801 million-$942 million, well above Infratil’s offer.

On Tuesday, Infratil said it owned 85 percent of Tilt and that a full privatisation “becomes almost inevitable”.

Infratil also warned shareholders who don’t wish to participate in Tilt’s upcoming A$280 million rights issue that, if Infratil doesn’t get to 90 percent acceptances, then the value of its rights could end up selling at a significant discount.

Oliver says there can be no guarantee of the final price shareholders will get for their rights if they don’t want to stump up with more capital.

“An objective of structuring the proposed issue as we intend to is to target an outcome where shareholders who do not participate, or do not fully participate, are not financially worse off," she said.

“This risk needs to be weighed against the very low price being offered by the JV. We do not believe that a preference to not participate in the capital raising should be grounds to accept the offer price that is so far from being fair.”

Infratil chief executive Marko Bogoievski had warned remaining shareholder that it could use the creep provisions of the Takeovers Code to get to the key 90 percent ownership level.

But Oliver said shareholders shouldn’t be concerned about this. “Given Mercury’s shareholding, Infratil cannot creep to 90 percent unless Mercury sells part of its shareholding,” she said.

“In fact, Infratil cannot increase its level of shareholding, other than through a takeover offer, for a period of approximately 12 months,” she said.

“By this time, we believe further benefit will have accrued to the company and its shareholder from our growth strategy, which has clearly been successful to date.”

With the offer ending tomorrow, Oliver was slow to respond to Infratil – Business Desk sought a response on Tuesday.

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