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Shareholder talks raise a lot of questions for NTR


Tom Roche

Tom Roche

Tom Roche

Energy investment vehicle NTR appears to be in play. The three largest shareholders, who together own around 70pc of the company, have been discussing its future.

One51, the second largest shareholder with 23pc, wants out. Pageant Holdings, owned by Nick Furlong, owns 10pc and wants out too. The biggest shareholder, Woodford Capital Group, owns 38pc and is controlled by NTR chairman Tom Roche and family. Roche wants to stick with the business.

After those three there are hundreds of smaller shareholders who have probably bought into the company at different prices - from €6.75 in December 2007, to €1.60 last week. The company's market capitalisation is just €156m.

According to a weekend newspaper report, the three biggest shareholders have reached a draft or outline agreement for what is a very unusual deal. If this were to happen as outlined, it would probably result in Woodford owning the vast majority, if not all, of the company.

According to the report, the plan is that NTR would sell its US wind energy business. The proceeds of the sale would be used by the company to make a tender offer to shareholders who wish to sell their shares back to NTR. Woodford would not sell its shares but One51, Pageant and whoever else wants to, could sell theirs.

It is a mechanism by which Roche would essentially take the company private without actually tabling a bid for the business.

It would also provide a useful mechanism to allow any or all other shareholders to make an exit.

But it isn't all good news for Roche. Selling the US wind energy assets would mean selling practically the last revenue-generating part of the NTR group. The plan would be to focus on developing its European wind energy interests, something which would require a lot of cash, but could come good eventually.

The precise status of these talks and any deal is likely to exercise smaller shareholders at the forthcoming NTR AGM on September 4th. How long have these shareholders been talking and what is the status of those talks?

If this proposal were to go ahead it could remove uncertainty around the future of NTR. But it could also create potential conflicts all over the place.

Firstly, how much would be an acceptable price for the sale of the US wind assets? Based on industry values, the 350MW operation could be worth between €180m and €200m. If an acceptable price is not offered, then what happens to the rest of the arrangement? Is the plan simply abandoned?


Once the US assets are sold, what price will NTR then offer to buy out all of the other shareholders, except Tom Roche? This price would have to be set by independent non-executive directors. But would the board have the final say on this price? If so, then Roche would be conflicted and might have to temporarily step aside from the board, as would Alan Walsh, chief executive of One51 who is also a non-executive director of NTR.

If a deal cannot be reached between the parties for this share tender to go ahead where does that leave NTR? Its three biggest shareholders would have signalled their interest in selling the US wind energy business and two of the three would have signalled their intention to exit the share register.

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Pulling the plug on it could either open up the company to a takeover offer from outside, or at least seriously undermine its ability to deliver on its strategy. Either way it now looks like a certain genie is out of the bottle and it may be very difficult to put it back in.

NTR's annual report was published on August 7th, just three weeks ago. It makes no mention of any such discussions among large shareholders. Perhaps this is understandable given that a deal has not been completed or put before the board.

But chairman Tom Roche does talk about NTR's new communications charter. "Our objective is to make our business more easily understood and to ensure that our shareholders receive regular and timely information about our progress and our strategy."

The communication mustn't be firing on all cylinders because just as Roche was in discussions with One51 and Pageant about selling the US wind assets, NTR group chief executive Rosheen McGuckian wrote in the same annual report just three weeks ago: "We continue to review opportunities to add to our US portfolio with an emphasis on the same principles that apply to our European strategy."

At the end of March 2007 NTR had group assets of €1.9bn. Total assets last March were €618m. Along the way it has sold off numerous disparate businesses and returned around €375m to shareholders.

But there has still been a very substantial erosion of shareholder value there.

It still has the US wind assets, around €45m in cash and various other assets.

All of these assets will have to be independently valued if the draft agreement is to be signed, approved by the board and then enacted.

NTR has suffered from having an unlisted plc status. It had too much liquidity in good times and too little in bad times.

It is vital that smaller shareholders do not lose out in whatever process is coming down the road at NTR. It promises to be an interesting AGM.

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