TIDMCWP
RNS Number : 5321U
Clipper Windpower Plc
18 October 2010
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, IN, INTO OR FROM CANADA, AUSTRALIA, JAPAN OR ANY OTHER
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF SUCH JURISDICTION
18 October 2010
RECOMMENDED ACQUISITION
of
Clipper Windpower Plc ("Clipper" or the "Company")
by
United Technologies Corporation ("UTC")
Summary
-- The Independent Clipper Directors and UTC are pleased to
announce that they have reached agreement on the terms of a
recommended cash acquisition by UTC (or a wholly-owned subsidiary
of UTC) of the entire issued and to be issued ordinary share
capital of Clipper not already owned by UTC (the
"Acquisition").
-- The Acquisition values the entire issued ordinary share
capital of Clipper at approximately GBP139.5 million.
-- Under the terms of the Acquisition, Clipper Shareholders will
be entitled to receive 65 pence in cash for each Clipper Share
held, representing a premium of approximately:-
-- 31.3 per cent. to 49.5 pence, being the closing mid-market
price per Clipper Share on 15 October 2010 (being the last Business
Day prior to the date of this announcement); and
-- 47.7 per cent. to 44 pence, being the closing mid-market
price per Clipper Share on 17 September 2010 (being the last
Business Day prior to the date on which Clipper announced that it
had received an approach from UTC).
-- UTC is a global provider of high technology products and
services to the building systems and aerospace industries. Its
principal operating units include Otis, Carrier, UTC Fire &
Security, Pratt & Whitney, Hamilton Sundstrand and Sikorsky.
UTC employs approximately 207,000 people and operates in more than
180 countries. UTC is quoted on the New York Stock Exchange with a
market capitalisation of approximately US$69 billion. For the year
ended 31 December 2009, UTC revenues were US$52.9 billion.
-- Clipper (www.clipperwind.com) is a company engaged in wind
energy technology, turbine manufacturing, and wind project
development. The Clipper Group designs advanced wind turbines,
manufactures its 2.5 MW Liberty wind turbine, and actively develops
wind power generating projects in the Americas and Europe.
Clipper's headquarters are in Carpinteria, California, US.
-- UTC currently holds approximately 49.9 per cent of the issued
share capital of Clipper. The Acquisition will allow UTC to secure
full control of Clipper, thereby creating the long term financial
stability necessary for Clipper's continued growth. The Acquisition
will enable Clipper to fully leverage UTC's management and
operational expertise as well as its advanced technology in blades,
turbines and gearbox design. It also builds on UTC's existing
portfolio of energy efficient products and power generation systems
that respond to the world's growing demand for cleaner, more
efficient products.
-- The Independent Clipper Directors, who have been advised by
Goldman Sachs International, consider the terms of the Acquisition
to be fair and reasonable. In providing advice to the Independent
Clipper Directors Goldman Sachs International has taken into
account the commercial assessments of the Independent Clipper
Directors. In addition, the Independent Clipper Directors consider
the terms of the Acquisition to be in the best interests of Clipper
Shareholders as a whole. Accordingly the Independent Clipper
Directors intend unanimously to recommend that Clipper Shareholders
vote in favour of the Acquisition and the Scheme Resolutions as the
Independent Clipper Directors have irrevocably undertaken to do in
respect of their entire beneficial holdings in Clipper, amounting
to, in aggregate, 195,000 Clipper Shares, representing
approximately 0.09 per cent. of the existing issued ordinary share
capital of Clipper.
-- In addition, James GP Dehlsen (the Chairman and founder of
the Company) and James B Dehlsen (a director of the Company) who
are not regarded as Independent Clipper Directors due to the
arrangements relating to the Acquisition described in Section 13
below, have also irrevocably undertaken to vote in favour of the
Acquisition and the Scheme Resolutions in respect of 3,938,797
Clipper Shares in aggregate (representing approximately 1.83 per
cent. of the existing issued ordinary share capital of
Clipper).
-- Dehlsen Associates LLC and Dehlsen Family Trust (in which
James GP Dehlsen and James B Dehlsen both have beneficial
interests) have also irrevocably undertaken to vote in favour of
the Acquisition and the Scheme Resolutions in respect of 14,878,365
Clipper Shares (representing approximately 6.93 per cent. of the
existing issued ordinary share capital of Clipper).
-- Further, UTC has received irrevocable undertakings from
certain key institutional Shareholders to vote or procure the vote
in favour of the Acquisition and the Scheme Resolutions, in respect
of a total of 44,955 574 Clipper Shares, representing approximately
20.9 per cent. of the existing issued ordinary share capital of
Clipper. These irrevocable undertakings would be released if
Clipper announces receipt of a subsequent competing offer which if
completed would be at a price per Scheme Share (or equivalent
thereof) which is higher than the price per Scheme Share pursuant
to the Acquisition.
-- In aggregate, the irrevocable undertakings received represent
approximately 29.80 per cent. of the existing issued ordinary share
capital of Clipper, and approximately 59.47 per cent. of the Scheme
Shares.
-- In addition, one institutional third party investor in
Clipper has entered into swap contracts with various swap
counterparties with respect to Clipper Shares. Whilst this third
party is not able to provide irrevocable undertakings to vote in
favour of the Acquisition and the Scheme Resolutions in respect of
the 10,015,960 Clipper Shares (representing approximately 4.7 per
cent. of the existing issued ordinary share capital of Clipper)
relating to these swap contracts, it has provided Clipper with
written confirmation that it has requested these swap
counterparties to vote in favour of the Acquisition and the Scheme
Resolutions in respect of such Clipper Shares as are held by such
swap counterparties at such time.
-- It is intended that the Acquisition will be implemented by
way of a court sanctioned scheme of arrangement under Part 26 of
the Act. UTC may (with the consent of the Company) make an offer to
Clipper Shareholders by way of a Takeover Offer rather than
pursuing the scheme of arrangement detailed in this announcement,
though this will be subject to UTC negotiating its release from the
Standstill Provision with Clipper.
-- The Acquisition will be conditional on the conditions set out
in Appendix I to this announcement, including the passing of the
Scheme Resolutions required to implement the Scheme by Scheme
Shareholders at the Court Meeting and by Clipper Shareholders at
the General Meeting, and the sanction of the Court. UTC will not be
entitled to attend or vote at the Court Meeting.
-- It is expected that the Scheme Document will be posted to
Clipper Shareholders in early November 2010 and the Court Meeting
and General Meeting are also expected to take place in November
2010. Completion of the Acquisition is expected in December 2010.
Further details will be set out in the Scheme Document.
-- UTC has agreed to make available to Clipper's wholly-owned
subsidiary Clipper Windpower, Inc. ("CWI"), a 362-day term loan
facility (the "Facility"), to be used for general corporate
purposes, under the terms of which CWI will be able to borrow in
tranches (with (a) $10 million available prior to 31 October 2010,
(b) to the extent not previously borrowed, $30.0 million available
through 30 November 2010, and (c) to the extent not previously
borrowed, $50.0 million available through 31 January 2011) up to an
aggregate principal amount equal to US$50 million. Each borrowing
under Facility will bear interest at a rate per annum equal to the
LIBOR Rate plus 7.00 per cent. The Facility is repayable by CWI if
the Acquisition is not consummated by 31 January 2011. CWI shall
have 60 days from receipt of UTC's written notice demanding
repayment to make such repayments, save in the event that (a) a
bankruptcy event occurs with respect to CWI or its subsidiaries, in
which case the Facility shall be automatically accelerated without
notice, or (b) the Board recommends a Third Party Transaction,
Clipper ceases to beneficially own (directly or indirectly) 100% of
the outstanding capital stock in CWI and/or its subsidiary Clipper
Windpower Development Company, Inc. ("CWDCI"), or CWI breaches a
specified covenant (relating to maintenance of corporate existence,
incurrence of debt or sales of assets, in each case other than as
permitted under the Facility), in which case CWI will have 14 days
from such recommendation, cessation or breach, as applicable, to
make such repayments. The Facility will be guaranteed by Clipper
and CWDCI and secured by lien over certain assets of CWI, subject
to the granting of such lien being approved by Clipper
Shareholders.
Commenting on the Acquisition, Mauricio Quintana, President and
Chief Executive Officer of Clipper, said:
"Clipper has made significant progress during 2010 as we have
established a positive momentum and sought to position the business
for the future. Part of this progress has been as a result of our
partnership with UTC and today's announcement represents the next
stage in this relationship. In the context of the challenging
environment that Clipper has faced in recent years, we believe that
the transaction represents good value for our shareholders and
provides substantial benefits for our customers and employees."
Enquiries
INVESTORS
Clipper Windpower Plc Jenny Matthews, Investor Relations Tel:
+44 (0)7827 259495
Goldman Sachs International (Nominated Adviser and Corporate
Broker to Clipper) Phil Raper
Brian Bolster
Nick Harper Tel: +44 (0)20 7724 1000
FINANCIAL PRESS
M:Communications Patrick d'Ancona / Charlotte Kirkham Tel: +44
(0)20 7920 2347 / 2331
BUSINESS AND TRADE
Mary Gates, (Director, Global Communications, Clipper Windpower
Plc) Tel: +1 661 301 0400
This announcement is for information purposes only and does not
constitute an offer to sell or an invitation to purchase any
securities or the solicitation of an offer to buy any securities,
pursuant to the Acquisition or otherwise. The Acquisition will be
made solely by means of a Scheme Document, which will contain the
full terms and conditions of the Acquisition, including details of
how the Acquisition can be approved and completed, and the
conditions set out in Appendix I to this announcement. Certain
terms used in this announcement are defined in Appendix II to this
announcement.
Goldman Sachs International is acting exclusively for Clipper
and no one else in connection with the Acquisition and will not be
responsible to anyone other than Clipper for providing the
protections afforded to clients of Goldman Sachs International or
for providing advice in connection with the Acquisition or any
matter referred to herein.
The Acquisition will not be subject to the City Code on
Takeovers and Mergers.
The release, publication or distribution of this announcement in
certain jurisdictions may be restricted by law. Persons who are not
resident in the United Kingdom or who are subject to other
jurisdictions should inform themselves of, and observe, any
applicable requirements.
Unless otherwise determined by UTC and permitted by applicable
law and regulation, the proposal relating to the Acquisition will
not be made, directly or indirectly, in, into or from a Restricted
Jurisdiction where to do so would violate the laws in that
jurisdiction. Accordingly, copies of this announcement and all
documents relating to the Acquisition are not being, and must not
be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction, and
persons receiving this announcement and all documents relating to
the Acquisition (including custodians, nominees and trustees) must
not mail or otherwise distribute or send them in, into or from such
jurisdictions.
The rights of Clipper Shareholders who are not resident in the
United Kingdom in connection with the Acquisition may be affected
by the laws of the relevant jurisdictions in which they are
resident. Persons who are not resident in the United Kingdom should
inform themselves of, and observe, any applicable requirements.
If you are a resident of the United States, please read the
following:
In accordance with normal UK market practice, UTC, or its
nominees, or its brokers (acting as agents) may from time to time
make certain purchases of, or arrangements to purchase, Clipper
Shares, other than pursuant to the Acquisition. These purchases may
occur either in the open market at prevailing prices or in private
transactions at negotiated prices. Any information about such
purchases will be disclosed as required in the United Kingdom.
Forward Looking Statements
This announcement contains statements about UTC and Clipper that
are or may be forward looking statements. All statements other than
statements of historical facts included in this announcement may be
forward looking statements. Without limitation, any statements
preceded or followed by or that include the words "targets",
"plans", "believes", "expects", "aims", "intends", "will", "may",
"anticipates", "estimates", "projects" or words or terms of similar
substance or the negative thereof, are forward looking statements.
Forward looking statements include statements relating to the
following: (i) future capital expenditures, expenses, revenues,
earnings, synergies, economic performance, indebtedness, financial
condition, dividend policy, losses and future prospects; (ii)
business and management strategies and the expansion and growth of
UTC's or Clipper's operations and potential synergies resulting
from the Acquisition; and (iii) the effects of government
regulation on UTC's or Clipper's business.
Such forward looking statements involve risks and uncertainties
that could significantly affect expected results and are based on
certain key assumptions. Many factors could cause actual results to
differ materially from those projected or implied in any forward
looking statements. Due to such uncertainties and risks, readers
are cautioned not to place undue reliance on such forward looking
statements, which speak only as of the date hereof. Each of UTC and
Clipper disclaims any obligation to update any forward looking or
other statements contained herein, except as required by applicable
law.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, IN, INTO OR FROM CANADA, AUSTRALIA, JAPAN OR ANY OTHER
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF SUCH JURISDICTION
18 October 2010
RECOMMENDED ACQUISITION
of
Clipper Windpower Plc by
United Technologies Corporation
1 Introduction
The Independent Clipper Directors and UTC are pleased to
announce that they have reached agreement on the terms of a
recommended cash acquisition by UTC (or a wholly-owned subsidiary
of UTC) of the entire issued and to be issued ordinary share
capital of Clipper not already owned by UTC (the "Acquisition"). It
is intended that the Acquisition will be effected by way of a
Court-sanctioned scheme of arrangement under Part 26 of the
Act.
2 The Acquisition
Under the Acquisition, which will be subject to the conditions
set out in Appendix I (which will be set out in the Scheme
Document), Clipper Shareholders will be entitled to receive:
for each Clipper Share 65p in cash
The Acquisition values the entire existing issued share capital
of Clipper at approximately GBP139.5 million and represents a
premium of approximately:
-- 31.3 per cent. to 49.5 pence, being the closing mid-market
price per Clipper Share on 15 October 2010 (being the last Business
Day prior to the date of this announcement); and
-- 47.7 per cent. to 44.0 pence, being the closing mid-market
price per Clipper Share on 17 September 2010 (being the last
Business Day prior to the date on which Clipper announced that it
has received an approach from UTC).
The Acquisition will be achieved by the cancellation of the
Scheme Shares held by Scheme Shareholders (pursuant to the Capital
Reduction) and the application of the reserve arising from such
cancellation in paying up in full new Clipper shares which have an
aggregate nominal value and share premium value equal to the
aggregate nominal value of the Scheme Shares cancelled and issuing
the same to UTC (or a wholly-owned subsidiary of UTC). Scheme
Shareholders will then receive the cash consideration referred to
above.
3 Background to and reasons for the Acquisition
UTC currently holds approximately 49.9 per cent of the issued
share capital of Clipper. The Acquisition will allow UTC to secure
full control of Clipper, thereby creating the long term financial
stability necessary for Clipper's continued growth.
The Acquisition will enable Clipper to fully leverage UTC's
management and operational expertise as well as its advanced
technology in blades, turbines and gearbox design. It also builds
on UTC's existing portfolio of energy efficient products and power
generation systems that respond to the world's growing demand for
cleaner, more efficient products.
4 Recommendation
The Independent Clipper Directors, who have been advised by
Goldman Sachs International, consider the terms of the Acquisition
to be fair and reasonable. In providing advice to the Independent
Clipper Directors Goldman Sachs International has taken into
account the commercial assessments of the Independent Clipper
Directors. In addition, the Independent Clipper Directors consider
the terms of the Acquisition to be in the best interests of Clipper
Shareholders as a whole. Accordingly the Independent Clipper
Directors intend unanimously to recommend that Clipper Shareholders
vote in favour of the Acquisition and the Scheme Resolutions as the
Independent Clipper Directors have irrevocably undertaken to do in
respect of their entire beneficial holdings in Clipper, amounting
to, in aggregate, 195,000 Clipper Shares, representing
approximately 0.09 per cent. of the existing issued ordinary share
capital of Clipper.
5 Background to and reasons for the recommendation
During the current fiscal year Clipper has started to
demonstrate important operational improvements within the Clipper
Group, primarily the conclusion of significant remediation
programmes, improved turbine performance as measured by turbine
availability, and significant improvement in gross margins and
other financial metrics. The strategic partnership between Clipper
and UTC, which was formed at the start of the year, has delivered
significant benefits in areas of technology access, market reach
and warranty support for selected new orders of Liberty Turbines.
The Independent Clipper Directors believe that the combination of
the operational improvements and the strategic partnership with UTC
highlight the positive momentum within Clipper and, when combined
with an improving outlook for the US and international wind
markets, the long term positive potential of the Clipper Group.
These improvements have been achieved in the context of
challenging economic and financing markets as the global economic
and credit crisis has continued to materially impact the
availability of financing for wind projects. Power market and
credit conditions have caused many of Clipper's customers to reduce
capital expenditure, delay projects, and defer turbine deliveries
under existing contracts. In the US, project developers and
electric utilities have dramatically reduced new orders for
turbines at the same time as lower prices for oil, natural gas and
coal have contributed to lower prices for power purchase
agreements. Although these conditions have started to stabilise,
the Clipper Group has experienced, and expects to continue to
experience, an adverse impact on its projected cash flows. This
impact is reflected in delayed timing and lower receipts of
deposits and progress payments from customers under new and
existing orders in comparison to the operating cash needed to
complete such orders and fund the Clipper Group's operations. As a
result, Clipper's consolidated unrestricted cash position of US$140
million at 30 June 2010 has decreased to approximately US$85
million at the end of September and, in the event no further new
orders are received, it is expected to further decline in the
fourth quarter of 2010.
Clipper's management has prepared operating plans and
projections for the foreseeable future which indicate that while
the Clipper Group's resources and operating flexibilities may be
adequate, there are risks and uncertainties on the timing of cash
flows which mean that additional funding may be necessary.
Historically, Clipper has met its operating capital requirements
through a combination of the deposits and progress payments
provided by customers and equity capital provided by institutional
and strategic investors, such as UTC. As a result, Clipper explored
numerous alternatives to raise capital including private and public
equity issuances and working capital credit lines with third party
financial institutions and with UTC. Discussions with UTC ranged
from providing credit support for a working capital facility to
equity purchases. During these discussions, UTC submitted a
conditional proposal to acquire all of the ordinary shares of
Clipper not currently owned by UTC. Following receipt of the
proposal, the Independent Clipper Directors retained financial and
legal advisers and initiated a full review of the strategic and
financing options for the Company, which included discussions with
UTC regarding a possible offer for the Company.
When evaluating the strategic and financing options and in
entering into discussions with UTC, the Independent Clipper
Directors have considered the long-term business potential of the
Clipper Group, and the risks to the Company's ability to realise
this long term potential in light of its current financial
position. The Independent Clipper Directors also considered:
-- the business outlook for the Clipper Group, including the
risks posed by the difficult economic and trading environment in
which it operates;
-- the losses that the Clipper Group has incurred since
flotation and, in particular, the loss of US$241.4 million for 2009
(which included significant expenses and provisions relating to
remediation) and US$27 million for the six months ended 30 June
2010;
-- the need for Clipper to have a strong balance sheet in order
to provide confidence to customers in the financial stability of
the business;
-- the negative net asset position of the Clipper Group which
was a net deficit of US$168 million as at 30 June 2010 and the
likely requirement for additional capital to be raised for Clipper
to continue operations in the current environment;
-- the cash balances of Clipper which have declined
substantially during 2009 and 2010; and
-- the material uncertainties that the current business
circumstances have created on Clipper's ability to continue as a
going concern.
In arriving at its decision to recommend the Acquisition, the
Independent Clipper Directors have taken into account the
deliverability and certainty for Clipper Shareholders of the
Acquisition as an option relative to other available proposals,
together with the potential benefits for all Clipper's stakeholders
of UTC as a full owner of Clipper. As a result, the Independent
Clipper Directors believe that the terms of the Acquisition
represent attractive value now for Clipper Shareholders.
On the basis of these factors the Independent Clipper Directors
concluded that the terms of Acquisition are fair and reasonable and
should be recommended to Clipper Shareholders.
6 Irrevocable undertakings
James GP Dehlsen (the Chairman and founder of the Company) and
James B Dehlsen (a director of the Company) are not regarded as
Independent Clipper Directors due to the arrangements relating to
the Acquisition described in Section 13 below. In addition to the
irrevocable undertakings referred to in section 4 above, James GP
Dehlsen and James B Dehlsen have also irrevocably undertaken to UTC
to vote in favour of the Acquisition and the Scheme Resolutions in
respect of their 3,938,797 Clipper Shares in aggregate
(representing approximately 1.83 per cent. of the existing issued
ordinary share capital of Clipper).
Dehlsen Associates LLC and the Dehlsen Family Trust (in which
James GP Dehlsen and James B Dehlsen both have beneficial
interests) have also irrevocably undertaken to vote in favour of
the Acquisition and the Scheme Resolutions in respect of 14,878,365
Clipper Shares (representing approximately 6.93 per cent. of the
existing issued ordinary share capital of Clipper).
Further, UTC has received irrevocable undertakings from certain
key institutional Shareholders to vote or procure the vote in
favour of the Acquisition and the Scheme Resolutions, in respect of
a total of 44,955 574 Clipper Shares, representing approximately
20.9 per cent. of the existing issued ordinary share capital of
Clipper. These irrevocable undertakings would be released if
Clipper announces a subsequent competing offer which if completed
would be at a price per Scheme Share (or equivalent thereof) which
is higher than the price per Scheme Share pursuant to the
Acquisition.
In aggregate, the number of Clipper Shares in respect of which
irrevocable undertakings have been received represent approximately
29.80 per cent. of the existing issued ordinary share capital of
Clipper and approximately 59.47 per cent. of the Scheme Shares.
In addition, one institutional third party investor in Clipper
has entered into swap contracts with various swap counterparties
with respect to Clipper Shares. Whilst this third party is not able
to provide irrevocable undertakings to vote in favour of the
Acquisition and the Scheme Resolutions in respect of the 10,015,960
Clipper Shares (representing approximately 4.67 per cent. of the
existing issued ordinary share capital of Clipper) relating to
these swap contracts, it has provided Clipper with written
confirmation that it has requested these swap counterparties to
vote in favour of the Acquisition and the Scheme Resolutions in
respect of such Clipper Shares as are held by such swap
counterparties at such time.
Further details of these irrevocable undertakings (including the
circumstances in which they will be released) will be set out in
the Scheme Document.
7 Current Trading
Since 30 June 2010, Liberty turbines have been delivered to
three customer sites in the United States and Mexico. These
deliveries are in line with management expectations which
anticipate higher delivery volumes and revenues for the second half
of 2010 than the first half of 2010. For the full year Clipper
expects to deliver to customers against firm orders in the range of
140 to 150 turbines (350 to 375 MW). The Company has also continued
to experience positive gross margin generation in recent months
through a combination of these higher delivery volumes and the
trends experienced in the first half of 2010 of an improvement in
gross margin through lower net remediation and warranty related
costs, lower component costs and improved average turbine sales
prices.
However, as announced on 30 September 2010, the Clipper Group
expects that in the second half of 2010 it could face an adverse
impact on its projected cash flows. This adverse impact is as a
result of the timing and lower receipts of deposits and progress
payments from customers expected under new and existing orders in
comparison to the operating cash needed to complete these orders
and fund operations. The Clipper Group's consolidated cash position
of US$140 million (excluding US$13 million restricted cash) at 30
June 2010 has decreased to approximately US$85 million (excluding
US$22 million restricted cash) at 30 September 2010. Clipper has
initiated a full review of the strategic and financing options for
the Company and continues to manage its working capital
efficiently, maintaining lower inventory balances and expanding its
use of multiple suppliers for components resulting in improved
delivery schedules and terms.
8 Information on UTC
UTC is a global provider of high technology products and
services to the building systems and aerospace industries. Its
principal operating units include Otis, Carrier, UTC Fire &
Security, Pratt & Whitney, Hamilton Sundstrand and Sikorsky.
Otis, Carrier and UTC Fire & Security serve customers in the
commercial and residential property industries worldwide. Carrier
also serves commercial, industrial, transport and refrigeration and
food service equipment customers. Pratt & Whitney, Hamilton
Sundstrand and Sikorsky primarily serve commercial and government
customers in both the original equipment and aftermarket parts and
services markets of the aerospace industry. Hamilton Sundstrand and
Pratt & Whitney also serve customers in certain industrial
markets, including power generation.
UTC employs approximately 207,000 people and operates in more
than 180 countries. UTC is quoted on the New York Stock Exchange
with a market capitalisation of approximately US$69 billion. For
the year ended 31 December 2009, UTC revenues were US$52.9
billion.
UTC is an existing shareholder in Clipper, and currently holds
approximately 49.9 per cent. of the issued share capital of
Clipper.
Additional information regarding UTC which has been publicly
filed with, or furnished to, the SEC may be obtained via the SEC's
EDGAR filing system, accessible from the SEC's website at
www.sec.gov.
9 Information on Clipper
Clipper (www.clipperwind.com) is a company engaged in wind
energy technology, turbine manufacturing, and wind project
development. The Clipper Group designs advanced wind turbines,
manufactures its 2.5 MW Liberty wind turbine, and actively develops
wind power generating projects in the Americas and Europe.
Clipper's headquarters are in Carpinteria, California, US. The
Company's 330,000 square foot manufacturing and assembly facility
for land-based wind turbines is located in Cedar Rapids, Iowa, and
its development centre for offshore wind turbine development is
located in Blyth, UK.
Clipper is a public company with its issued shares traded on AIM
of the London Stock Exchange. Clipper's ticker symbol is CWP. The
ordinary shares of Clipper are not registered under the U.S.
Securities Act of 1933, as amended. Such shares may not be offered
or sold to residents of the United States or to persons acting on
their behalf, or to other persons who are "United States Persons"
within the meaning of Regulation S as promulgated under the
Securities Act of 1933, unless such shares have been registered
under the Securities Act or there is an available exemption from
registration.
10 Financing
The cash consideration payable by UTC for the Acquisition will
be funded using UTC's existing cash resources. UTC has provided
Clipper with confirmation that has the ability using such resources
to fund the payment of the cash consideration to each Scheme
Shareholder and to each option holder who exercises its options
pursuant to the Share Plan after the Effective Date.
11 Implementation Agreement
UTC and Clipper have entered into an Implementation Agreement in
relation to the Acquisition which contains provisions regarding the
implementation of the Acquisition and certain assurances and
confirmations between the parties. The Implementation Agreement is
subject to the Conditions and termination rights described in
Appendix 1.
Non solicitation arrangements
Clipper has undertaken, amongst other things, not to, and to
procure that no member of the Clipper Group and their respective
directors, employees and advisers shall not, save in accordance
with the fiduciary duties of the Independent Clipper
Directors:-
(i) solicit, initiate, encourage, negotiate, discuss or
otherwise seek to procure any initial or further approach to or
from any other person with a view to a Third Party Transaction
taking place; or
(ii) enter into or continue discussions and/or negotiations
with, any other person with a view to a Third Party Transaction
taking place.
Clipper has also undertaken to notify UTC immediately of any
approach that is made to it or any other member of the Clipper
Group or the directors, employees, advisers or agents thereof in
relation to a Third Party Transaction.
Break fee arrangements
Clipper has agreed to pay UTC a break fee of GBP1,368,145
if:-
(a) the recommendation of the Independent Clipper Directors of
the Acquisition is either (i) withdrawn or (ii) qualified or
modified adversely, or
(b) a Third Party Transaction (or any amendment, variation or
revision of such proposal) is announced with Clipper which results,
or would result in any person, directly or indirectly, acquiring
(in one transaction or a series of transactions) (i) Clipper shares
(excluding Clipper shares issued and allotted pursuant to the Share
Plan) issued and allotted by Clipper after the date of the
Implementation Agreement which in aggregate equate to more than 5
per cent. of the enlarged issued share capital of Clipper as at the
relevant time or (ii) a material part of Clipper Group's business
or assets, in either case at any time before the Scheme lapses or
is withdrawn.
12 Interim Credit Facility
UTC has agreed to make available to Clipper Windpower, Inc.
("CWI"), a wholly-owned subsidiary of Clipper, a 362-day term loan
facility (the "Facility"), to be used for general corporate
purposes, under the terms of which CWI will be able to borrow in
tranches (with (a) $10.0 million available prior to 31 October 2010
(b) to the extent not previously borrowed, US$30.0 million
available through 30 November 2010, and (c) to the extent not
previously borrowed, US$50.0 million available through 31 January
2011) up to an aggregate principal amount equal to US$50.0 million.
Each borrowing under the Facility will bear interest at a rate per
annum equal to the LIBOR Rate plus 7.00 per cent. The Facility is
repayable by CWI if the Acquisition is not consummated by 31
January 2011. CWI shall have 60 days from receipt of UTC's written
notice demanding repayment to make such repayments, save in the
event that (a) a bankruptcy event occurs with respect to CWI or its
subsidiaries, in which case the Facility shall be automatically
accelerated without notice, or (b) the Board recommends a Third
Party Transaction, Clipper ceases to beneficially own (directly or
indirectly) 100% of the outstanding capital stock in CWI and/or its
subsidiary Clipper Windpower Development Company, Inc. ("CWDCI"),
or CWI breaches a specified covenant (relating to maintenance of
corporate existence, incurrence of debt or sales of assets, in each
case other than as permitted under the Facility), in which case CWI
shall have 14 days from such recommendation cessation or breach, as
applicable, to make such repayments. The Facility will be
guaranteed by Clipper and CWDCI. The Facility contains customary
representations, warranties, covenants and events of default for
this type of financing, including customary and appropriate grace
periods, materiality thresholds, and permitted baskets and
exceptions. In particular, each of the following events is an event
of default under the Facility:
-- nonpayment of principal when due;
-- nonpayment of interest, fees or other amounts after a grace
period of three days;
-- material inaccuracy of representations and warranties given
by CWI;
-- violation of covenants (subject, in the case of certain
affirmative covenants, to a grace period of 30 days);
-- cross default, bankruptcy events, certain ERISA events
monetary or non-monetary judgments, material adverse change and
actual or asserted invalidity of any guarantee or security document
or security interest;
-- any change of control in CWI or CWDI; and
-- termination of the Acquisition, or failure of the Acquisition
to complete for any reason, including because of a Third Party
Transaction.
CWI is not permitted to make any drawdowns under the Facility
until such time as certain members of the Clipper Group provide
security to UTC in connection with CWI's obligations under the
Facility. The security required is a pledge over all intellectual
property rights of CWI, together with a guaranty of CWI's
obligations from each of the Company and Clipper Windpower
Development Company, Inc.
The granting of security over certain business and assets of the
Clipper Group in favour of UTC could in certain circumstances lead
to UTC enforcing rights under the security arrangements, which in
turn could result in the Clipper Group being required to dispose of
assets and business. These disposals, either in a single
transaction or as a series of linked transactions over a 12 month
period, could in aggregate exceed 75 per cent. in each of the class
tests (as defined in the AIM Rules for Companies). Consequently, in
accordance with Rule 15 of the AIM Rules, Clipper will seek the
necessary approvals from its Shareholders for the granting of such
security.
13 Termination of arrangements with James G. P. Dehlsen and his
affiliates
Patent and Royalty Arrangements
James G.P. Dehlsen, Clipper's founder and Chairman, and certain
affiliates are parties to various agreements with Clipper relating
to the technology used in Clipper's business. These agreements were
entered into in 2001 and 2002 in connection with the original
formation of Clipper and the original funding of institutional
equity capital. The agreements provide for royalties to be paid in
a sliding scale percentage based on the gross margin realized by
the Clipper Group on sales of wind turbines that include the
technology covered by the patents. The royalties due under these
arrangements are based on Clipper's future levels of turbine sales
and the gross margins realized therefrom, and could result in
significant future payments by Clipper as its business grows. At
the request of UTC and Clipper, it has been agreed that these
arrangements shall be terminated, conditional on completion of the
Acquisition, in order to create certainty over Clipper's future
royalty obligations under these arrangements.
Dehlsen Associates LLC, which is owned by James GP Dehlsen and
his son, James. B Dehlsen, has agreed to sell to the Clipper Group,
in conjunction with the closing of the Acquisition, all its rights
under the original patent sale and transfer agreements (including
all rights to receive royalties) for a payment of US$9,950,000,
which both Clipper and UTC believe to be appropriate and in the
long term interests of the Company. As part of this settlement,
James GP Dehlsen and Dehlsen Associates LLC have agreed to
relinquish any and all claims they have or may have to future
royalty payments from Clipper.
Severance arrangements
Under James GP Dehlsen's existing employment agreement and other
contractual arrangements with the Clipper Group, James GP Dehlsen
receives remuneration and benefits including stock options, is
eligible to participate in the Clipper Group's bonus scheme, has
the benefit of a change of control payment and enjoys various
additional post-employment retirement benefits (collectively the
"Benefits").
In conjunction with the closing of the Acquisition, in
consideration of a final settlement payment of US$800,000 from the
Company, James GP Dehlsen's employment contract will terminate with
immediate effect from such date, his existing rights to all
Benefits would immediately be extinguished and at such time he
would irrevocably waive his rights to bring claims (if any) against
any member of the Company's Group. The settlement payment would be
made 60 days after James GP Dehlsen's retirement and such sum is
substantially less than the value of the Benefits which would
otherwise be due to James GP Dehlsen over the coming years had his
employment continued under the prior contract. As part of the
severance arrangements Mr Dehlsen also agrees not to compete with
the business of the Clipper Group for a period of three years.
14 Related party transactions
The Implementation Agreement, the Facility (and related security
arrangements) and the termination arrangements with James G P
Dehlsen and his affiliates will all be related party transactions
pursuant to Rule 13 of the AIM Rules. As such, the Independent
Clipper Directors confirm that, having consulted with Clipper's
Nominated Adviser, Goldman Sachs International, they consider that
the terms of the Implementation Agreement, the Facility (and
related security arrangements) and the termination arrangements
with James G. P. Dehlsen and his affiliates are fair and reasonable
insofar as Clipper Shareholders are concerned.
15 Directors, management and employees
Following completion of the Acquisition, save as described in
the below paragraph, the existing employment rights of the
directors, management and employees of Clipper will be fully
safeguarded. UTC's plans for Clipper do not involve any material
change in the conditions of employment of Clipper employees.
Following completion of the Acquisition, each of James GP
Dehlsen, Albert J Baciocco, Jr, James B Dehlsen, Anthony RC Durrant
and Sidney L Tassin will resign as a Director of the Company with
immediate effect.
16 Clipper Share Plan
Holders of options under the Share Plan will be contacted
regarding the effect of the Acquisition on their rights under the
Share Plan and appropriate proposals will be made to such
participants in due course. The Acquisition will extend to any
Clipper Shares which are unconditionally allotted or issued as a
result of the exercise of existing options and vesting of awards
under the Share Plan before the date on which the Acquisition
completes.
17 Scheme Document
It is expected that the Scheme Document setting out the details
of the Acquisition will be despatched to Clipper shareholders in
early November 2010 and the Court Meeting and General Meeting are
expected to take place later in November 2010. Completion of the
Acquisition is expected in December 2010. Further details will be
set out in the Scheme Document.
Clipper shareholders are urged to read the Scheme Document and
any accompanying documentation when they are sent to them because
they will contain important information.
18 Scheme of arrangement
It is intended that the Acquisition will be implemented by means
of a Court-sanctioned scheme of arrangement between Clipper and its
shareholders under Part 26 of the Act. The Scheme will involve an
application by Clipper to the Court to sanction the Scheme and to
confirm the cancellation of all the Scheme Shares, in consideration
for which Scheme Shareholders will receive consideration in
accordance with the terms of the Acquisition. It is also intended
as part of the Scheme to effect the Capital Reduction.
The Scheme will be subject to the Conditions and certain further
terms referred to in Appendix I to this announcement, and to be
included in the Scheme Document. The Code does not apply to the
Scheme Document, the Acquisition or the Scheme. As such the rules
of the Code, including in particular Rules 2.7 and 13.4, which
would, if the Code applied, restrict the ability of UTC not to
proceed with the Acquisition or the Scheme or to invoke a Condition
or fail to waive a Condition, do not apply.
In particular, to become effective, the Scheme requires the
approval of Scheme Shareholders by a majority in number present and
voting at the Scheme Meeting, either in person or by proxy,
representing not less than 75 per cent. in value of the Scheme
Shares which are voted at the Scheme Meeting (or any adjournment
thereof).
UTC holds 107,098,020 Clipper Shares, representing approximately
49.9 per cent. of Clipper's issued share capital, and will not be
entitled to attend or vote at the Scheme Meeting.
In addition, to become effective, the Scheme also requires the
passing at the Clipper General Meeting of certain resolutions which
are necessary to implement the Scheme. These resolutions are in
respect of, among others:-
-- the cancellation of existing Scheme Shares and the approval
of the issue of new ordinary shares in Clipper to UTC (and/or its
nominee(s)) in accordance with the Scheme; and
-- the amendment of Clipper's articles of association to ensure
that the Clipper Shares issued under the Share Plan following the
Scheme becoming effective be automatically transferred to UTC on
the same terms as under the Scheme.
These resolutions require the approval of Clipper Shareholders
representing at least 75 per cent. of the votes cast (either in
person or by proxy) at the General Meeting which will be held
immediately after the Scheme Meeting.
Following the Scheme Meeting and the General Meeting, the Scheme
must be sanctioned and the Capital Reduction confirmed by the
Court, and will only become effective on delivery to the Registrar
of Companies of a copy of the Court Order, together with the
statement of capital attached to it.
UTC may, with the consent of the Company, make an offer to
Shareholders by way of a Takeover Offer for the entire issued share
capital of Clipper rather than pursuing the scheme of arrangement
detailed in this announcement. Any such Takeover Offer shall be
subject to UTC negotiating its release from the Standstill
Provision with Clipper. Any such Takeover Offer will be subject to
an acceptance condition of UTC having acquired (whether pursuant to
the Takeover Offer or otherwise) such percentage (being more than
50 per cent.) of the Clipper Shares, as UTC may decide, having
consulted with Clipper, and will otherwise be implemented on the
same terms (subject to appropriate amendments) including the price,
so far as applicable, as those which would apply to the Scheme and
in compliance with applicable laws and regulations.
Upon the Scheme becoming effective, it will be binding on all
Scheme Shareholders, irrespective of whether or not they attended
or voted at the Scheme Meeting or the General Meeting.
The Scheme Document will include full details of the Scheme,
together with notices of the Scheme Meeting and the General Meeting
and the expected timetable, and will specify the action to be taken
by Scheme Shareholders. As at the date of this announcement, the
expected timetable is for the Scheme Meeting to be held on 24
November 2010 and for the Court hearing to take place on 14
December 2010.
19 Subscription Agreement
The surviving provisions of the Subscription Agreement remain in
effect. In particular, the standstill provision in the Subscription
Agreement that prevents UTC and its associates from acquiring more
than 55 per cent. of Clipper's issued share capital (the
"Standstill Provision") shall only be released on the Effective
Date, or as otherwise necessary to give effect to the provisions of
the Implementation Agreement. UTC shall retain its powers to
appoint members to the Board of Clipper under the Subscription
Agreement, and its consent rights over matters such as (i) the
appointment or replacement of the President and Chief Executive
Officer of Clipper, (ii) the entering of Clipper into or
termination of any arrangement, contract or transaction outside the
normal course of the Clipper Group's business which would be
material to the Clipper Group taken as a whole; and the entering of
Clipper into a Substantial Transaction other than (a) the sale or
supply of wind turbines to Clipper Group customers in the normal
course of business or (b) the sale of project development assets,
in each case only to the extent that Board approval would not have
been required.
20 Regulatory issues
The Acquisition is conditional upon, inter alia, the applicable
waiting period in respect of the Acquisition under the HSR Act
having expired or terminated.
21 Delisting, cancellation of trading and re-registration
Upon the Scheme becoming effective UTC intends to procure that
Clipper cancels admission to trading in Clipper Shares on AIM.
It is anticipated that cancellation of admission of Clipper's
shares to trading on AIM will take effect on or shortly after the
date that the Scheme becomes effective.
Simultaneous with the cancellation of admission of Clipper's
shares to trading on AIM, Clipper will be re-registered as a
private company.
22 General
The Acquisition will be made on the terms and subject to the
Conditions and further terms set out herein and in Appendix I to
this announcement and to be set out in the Scheme Document. Certain
terms used in this announcement are defined in Appendix II to this
announcement.
Goldman Sachs International is acting exclusively for Clipper
and no one else in connection with the Acquisition and will not be
responsible to anyone other than Clipper for providing the
protections afforded to clients of Goldman Sachs International or
for providing advice in connection with the Acquisition or any
matter referred to herein.
This announcement is for information purposes only and does not
constitute an offer to sell or an invitation to purchase any
securities or the solicitation of an offer to buy any securities,
pursuant to the Acquisition or otherwise.
This announcement has been prepared for the purpose of complying
with English law and the information disclosed may not be the same
as that which would have been disclosed if this announcement had
been prepared in accordance with the laws of jurisdictions outside
the United Kingdom. The Acquisition will not be subject to the
Code.
The release, publication or distribution of this announcement in
certain jurisdictions may be restricted by law. Persons who are not
resident in the United Kingdom or who are subject to other
jurisdictions should inform themselves of, and observe, any
applicable requirements.
Unless otherwise determined by UTC and permitted by applicable
law and regulation, the proposal relating to the Acquisition will
not be made, directly or indirectly, in, into or from a Restricted
Jurisdiction where to do so would violate the laws in that
jurisdiction. Accordingly, copies of this announcement and all
documents relating to the Acquisition are not being, and must not
be, directly or indirectly, mailed or otherwise forwarded,
distributed or sent in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction, and
persons receiving this announcement and all documents relating to
the Acquisition (including custodians, nominees and trustees) must
not mail or otherwise distribute or send them in, into or from such
jurisdictions as doing so may invalidate the Acquisition.
The rights of Clipper Shareholders who are not resident in the
United Kingdom in connection with the Acquisition may be affected
by the laws of the relevant jurisdictions in which they are
resident. Persons who are not resident in the United Kingdom should
inform themselves of, and observe, any applicable requirements.
If you are a resident of the United States, please read the
following:
In accordance with normal UK market practice, UTC, or its
nominees, or its brokers (acting as agents) may from time to time
make certain purchase of, or arrangements to purchase, Clipper
Shares, other than pursuant to the Acquisition. These purchases may
occur either in the open market at prevailing prices or in private
transactions at negotiated prices. Any information about such
purchases will be disclosed as required in the United Kingdom.
The Acquisition will be subject to the applicable requirements
of the London Stock Exchange and the Financial Services
Authority.
Forward looking statements
This announcement contains statements about UTC and Clipper that
are or may be forward looking statements. All statements other than
statements of historical facts included in this announcement may be
forward looking statements. Without limitation, any statements
preceded or followed by or that include the words "targets",
"plans", "believes", "expects", "aims", "intends", "will", "may",
"anticipates", "estimates", "projects" or words or terms of similar
substance or the negative thereof, are forward looking statements.
Forward looking statements include statements relating to the
following: (i) future capital expenditures, expenses, revenues,
earnings, synergies, economic performance, indebtedness, financial
condition, dividend policy, losses and future prospects; (ii)
business and management strategies and the expansion and growth of
UTC's or Clipper's operations and potential synergies resulting
from the Acquisition; and (iii) the effects of government
regulation on UTC's or Clipper's business.
Such forward looking statements involve risks and uncertainties
that could significantly affect expected results and are based on
certain key assumptions. Many factors could cause actual results to
differ materially from those projected or implied in any forward
looking statements. Due to such uncertainties and risks, readers
are cautioned not to place undue reliance on such forward looking
statements, which speak only as of the date hereof. Each of Clipper
and UTC disclaims any obligation to update any forward looking or
other statements contained herein, except as required by applicable
law.
Enquiries
INVESTORS
Clipper Windpower Plc Jenny Matthews, Investor Relations Tel:
+44 (0)7827 259495
Goldman Sachs International (Nominated Adviser and Corporate
Broker to Clipper) Phil Raper
Brian Bolster
Nick Harper Tel: +44 (0)20 7724 1000
FINANCIAL PRESS
M:Communications Patrick d'Ancona / Charlotte Kirkham Tel: +44
(0)20 7920 2347 / 2331
BUSINESS AND TRADE
Mary Gates, (Director, Global Communications, Clipper Windpower
PLC) Tel: +1 661 301 0400
APPENDIX I CONDITIONS OF THE ACQUISITION
The Acquisition
The Acquisition, which will be made by UTC (or a wholly-owned
subsidiary of UTC), will be governed by English law and subject to
the jurisdiction of the English courts. The Acquisition will be
subject to the following conditions:
1 with regard to the Scheme:
1.1 the approval of the Scheme by a majority in number
representing not less than three fourths in value of the Scheme
Shareholders (or the relevant class or classes thereof, if
applicable) who are on the register of members of the Company at
the Scheme Voting Record Time, present and voting, whether in
person or by proxy, at the Court Meeting and any separate class
meeting which may be required by the Court or any adjournment
thereof;
1.2 the resolutions required to approve and implement the Scheme
being duly passed at the General Meeting (or any adjournment
thereof); and
1.3 the sanction of the Scheme and the confirmation of the
Capital Reduction by the Court (in either case with or without
modification (but subject to such modification being acceptable to
UTC and the Company)), office copies of the Court Order and of a
statement of capital being delivered to the Registrar of Companies
and, if the Court so orders for the Scheme to become effective,
registration of the Court Order confirming the Capital Reduction
with the Registrar of Companies; and
2 the applicable waiting period in respect of the Acquisition
under the HSR Act having expired or been terminated;
3 all necessary material notifications and filings having been
made in connection with the Acquisition and all statutory and
regulatory obligations in connection with the Acquisition in any
relevant jurisdiction having been complied with in respect of the
Acquisition and except pursuant to Part 26, Chapter 3 of the 2006
Act, all necessary material consents for the Acquisition having
been obtained from all appropriate third parties, and all such
authorisations or consents remaining in full force and effect at
the time at which the Court sanctions the Scheme and confirms the
Capital Reduction;
4 save as Disclosed, since 30 June 2010, no Governmental Body,
customer, supplier, or financial institution having taken any step
that would make the Acquisition void, unenforceable or illegal, or
restrict, prohibit or delay to a material extent or otherwise
materially interfere with the implementation of, or impose material
additional conditions or obligations with respect to the
Acquisition, or otherwise materially challenge or require material
amendment of, the Acquisition;
5 save as Disclosed, there being no provision of any
arrangement, agreement, lease, licence, permit or other instrument
to which any member of the Wider Company Group is a party or by or
to which any such member or any of its assets is or may be bound or
be subject, which as a consequence of the Acquisition, or because
of a change in the control or management of any member of the Wider
Company Group or otherwise, would result in the rights,
liabilities, obligations or interests of any member of the Wider
Company Group in, or the business of any such member with, any
person, firm or body (or any arrangement or arrangements relating
to any such interest or business) being terminated, adversely
modified or affected, in each case which would have a Material
Adverse Effect;
6 save as Disclosed, no member of the Wider Company Group having
since 30 June 2010:
6.1 save always in connection with the incorporation of any
company as members of the Company Group, issued or agreed to issue,
authorised, proposed, or announced its intention to authorise or
propose, the issue of additional shares of any class, or securities
convertible into, or exchangeable for, or rights, warrants or
options to subscribe for or acquire, any such shares or convertible
securities save for the issue of Scheme Shares pursuant to or in
connection with the exercise or vesting of options or awards
granted under, or the grant of options or awards under, the Share
Plan, such grants or awards having been disclosed to UTC prior to
the date of the Implementation Agreement;
6.2 save in respect of transactions between members of the
Clipper Group recommended, declared, paid or made or proposed to
recommend, declare, pay or make any bonus issue, dividend or other
distribution whether payable in cash or otherwise;
6.3 other than pursuant to the implementation of the Acquisition
(and save for transactions in the ordinary course of business or in
respect of transactions between members of the Clipper Group)
implemented, effected or authorised any merger, demerger,
reconstruction, amalgamation, scheme of arrangement, commitment or
acquisition or disposal of assets or shares (or the equivalent
thereof) in any undertaking or undertakings or any change in its
share or loan capital (save for the issue of Scheme Shares on the
exercise or vesting of options or awards granted before the date of
this announcement under the Share Plan);
6.4 save in respect of the existing security granted by members
of the Clipper Group to UTC, transferred, created or triggered the
enforcement of any mortgage, charge or other security interest over
the whole or any part of the business, property or assets of any
member of the Wider Company Group (whenever arising or having
arisen) or authorised, proposed or announced any intention to do
so;
6.5 issued, authorised or proposed or announced an intention to
authorise or propose, the issue of any debentures or (save for
transactions between the Company and its wholly-owned subsidiaries
or transactions under existing credit arrangements or in the
ordinary course of business of the Wider Company Group) incurred
any indebtedness or contingent liability;
6.6 entered into or varied to a material extent or authorised
the terms of, or make any offer (which remains open for acceptance)
to enter into or vary to a material extent the terms of, any
service agreement with any director or Executive of any member of
the Wider Company Group;
6.7 agreed to provide or modified the terms of any Share Plan,
incentive scheme or, to the extent not de minimis in nature and
within the ordinary course of business, other benefit relating to
the employment or termination of employment of any person employed
by the Clipper Group;
6.8 purchased, redeemed or repaid or announced a proposal to
purchase, redeem or repay any of its own shares or other securities
(or the equivalent) or reduced or made any other change to or
proposed the reduction or other change to any part of its share
capital;
6.9 the Company or any relevant member of the Clipper Group
having been permitted to draw down sums under the terms of the
Credit Facility Agreement, being unable, or admitted in writing
that it is unable, to pay its debts or ceased or threatened to
cease carrying on all or a substantial part of any business; or
6.10 the Company or any relevant member of the Clipper Group
having been permitted to draw down sums under the terms of the
Credit Facility Agreement, in respect of any of the Company,
Clipper Windpower Development, Inc or Clipper Windpower, Inc.,
having taken any corporate action or had any proceedings initiated
by any court against it for its winding-up (voluntary or
otherwise), dissolution or reorganisation or for the appointment of
a receiver, administrator, administrative receiver, trustee or
similar officer of all or any material part of its assets or
revenues or any analogous proceedings in any jurisdiction or
appointed any analogous person in any jurisdiction,
or having entered into any agreement or commitment to effect any
of the transactions, matters or events referred to in this
paragraph 6;
7 save as Disclosed,:-
7.1 there having been no material defect, malfunction or other
error with respect to the design, manufacture, operation or
servicing of the Wider Company Group's products (including any
component thereof, whether supplied by the Wider Company Group or
any third party) discovered since 30 September 2010 which would
require the Wider Company Group or UTC to undertake a material
programme of inspection, servicing, repair or replacement of any of
the Wider Company Group's products or material component thereof,
in each case which would have a Material Adverse Effect;
7.2 since 30 September 2010, the Wider Company Group having not
received any notices in writing from customers that would cancel,
in the aggregate, delivery of turbines representing in excess of
thirty per cent. (30%) measured in megawatts of the Wider Company
Group's firm backlog, which firm orders have not been replaced by
new firm orders prior to the Court Hearing, the net impact of which
is a Material Adverse Effect;
7.3 since 30 September 2010, no litigation, arbitration
proceedings, prosecution or other legal proceedings (including, for
this purpose, any Governmental Body, regulatory or similar
investigation or enquiry) (a "Proceeding") having been announced or
instituted by or against or remaining outstanding against or in
respect of any member of the Wider Company Group which have had or
would reasonably be expected to have a Material Adverse Effect and
no executive officer of the Wider Company Group having received a
written notice from any third party that any such proceedings are
pending or threatened, and for the avoidance of doubt any legal
proceeding shall only be considered "announced or instituted" for
the purposes of this Condition 7.3 if (i) a filing or delivery of
notice of a Proceeding is made with any court, tribunal, panel or
other arbitration body, or (ii) a public announcement regarding a
government investigation is made by any Governmental Body or (iii)
written notice of such a Proceeding has been received by a member
of the Wider Company Group;
7.4 there being no behaviour of a Director, officer or employee
of the Wider Company Group Company that could reasonably be
considered to be fraud or wilful misconduct and which has a
Material Adverse Effect; or
7.5 the operations of the Wider Company Group not infringing any
rights or interests of third parties in intellectual property where
such infringement has had, or would reasonably be expected to have,
a Material Adverse Effect;
8 since 30 September 2010 and save as Disclosed, no fact,
circumstance, event, change, effect or occurrence having arisen
which, individually or in the aggregate, has or would reasonably be
expected to have a material adverse effect on or with respect to
the business, results of operation or financial condition of the
Wider Company Group taken as a whole (other than (i) a change
affecting all companies, without disproportionate impact, carrying
on business similar to that of the Wider Company Group in similar
countries in which the Wider Company Group carries on business or
(ii) changes that relate to changes in stock markets, interest
rates, exchange rates, commodity prices or other general economic
conditions outside the control of the Wider Company Group or (iii)
movements in the market price of the Clipper Shares) (and so that
this Condition 8 shall be interpreted in a manner consistent with
UK Takeover Panel's practice in relation to Rule 13.4(a) of the
Code as set out in Practice Statement No. 5 dated 28 April 2004 as
amended on 30 March 2009 as if the Code applied to such Condition);
and
9 UTC not having discovered after the date of this Agreement
that any financial, business or other information concerning the
Wider Company Group as contained in the information Disclosed which
is material in the context of the Acquisition, was, at the time
Disclosed, misleading or contained any misrepresentation of fact or
omitted to state a fact necessary to make any information contained
therein not misleading at the time Disclosed, in each case to an
extent which would have a Material Adverse Effect.
UTC reserves the right to waive any of the above Conditions 2 to
9 (inclusive).
The Acquisition will not proceed unless all the above Conditions
have been fulfilled or, where permitted, waived or, where
appropriate, have been determined by UTC to be or remain satisfied,
prior to the Court Hearing.
UTC shall be under no obligation to waive (if capable of
waiver), to determine to be or remain satisfied or to treat as
fulfilled Condition 2 to 9 (inclusive) by a date earlier than the
latest date for the fulfilment of that Condition notwithstanding
that the other Conditions of the Acquisition may at such earlier
date have been waived or fulfilled and that there are at such
earlier date no circumstances indicating that any of such
Conditions may not be capable of fulfilment.
Termination Rights
UTC and Clipper shall have the right to terminate the
Implementation Agreement with immediate effect (and upon such
termination for the avoidance of doubt the Scheme shall be
withdrawn) if any of the following events occur:
-- if any Condition becomes incapable of satisfaction or is
invoked so as to cause the Acquisition not to proceed; or
-- if (i) the Scheme is not approved by the Scheme Shareholders
at the Court Meeting; (ii) the resolutions are not passed at the
General Meeting; (iii) the Court refuses to sanction the Scheme or
grant the Court Order; or (iv) (save as the parties may otherwise
agree in writing) the Effective Date has not occurred on or before
the Long Stop Date; or
-- a Third Party Transaction is entered into with Clipper which
results in any person, directly or indirectly, acquiring (in one
transaction or a series of transactions): (i) more than 10 per
cent. of the issued share capital of Clipper; or (ii) a material
part of the Clipper Group's business or assets, in either case at
any time before the Scheme lapses or is withdrawn; or
-- the recommendation of the Independent Clipper Directors to
Scheme Shareholders to vote in favour of the Scheme is subsequently
either: (i) withdrawn; or (ii) qualified or modified adversely.
APPENDIX II DEFINITIONS
The following definitions apply throughout this announcement
unless the context requires otherwise.
"Acquisition" the recommended cash offer being made by
UTC (or a wholly-owned subsidiary of UTC)
to acquire the entire issued and to be
issued share capital of Clipper not otherwise
held by UTC to be implemented by way of
a scheme of arrangement in accordance with
Part 26 of the Act on the terms and subject
to the conditions to be set out in the
Scheme Document, including, where the context
requires, any subsequent revision, variation,
extension or renewal of such offer
"Act" the Companies Act 2006
"AIM" AIM, the market of the same name operated
by the London Stock Exchange
"Australia" the commonwealth of Australia, its territories
and possessions and all areas subject to its
jurisdiction and all political sub-divisions
thereof
"Board" the board of directors of Clipper
"Business Day" a day (other than Saturdays, Sundays and
public holidays in the UK) on which banks
are open for business in the City of London
"Canada" Canada, its provinces and territories and
all areas subject to its jurisdiction and
all political sub-divisions thereof
"Capital Reduction" the proposed reduction of Clipper's share
capital in connection with the Scheme under
section 648 of the Act, including the
cancellation and the extinguishing of the Scheme
Shares provided for by the Scheme
"Clipper Group" Clipper, its subsidiaries and subsidiary
undertakings
"Clipper Shareholders" the holders of Clipper Shares
or "Shareholders"
"Clipper Shares" the existing unconditionally allotted or
issued and fully paid ordinary shares of
10 pence each in the capital of Clipper
at such time as;
(a) if the Acquisition is implemented by
way of the Scheme, the Scheme having become
effective pursuant to its terms; or
(b) (if the Acquisition is (with the consent
of the Company) implemented by way of a
Takeover Offer, such offer having been
declared or become unconditional in all
respects in accordance with the requirements
of the Takeover Offer
"Code" the City Code on Takeovers and Mergers
"Conditions" the conditions to the Acquisition and the
Scheme as set out in Appendix 1 to this
announcement
"Court" the High Court of Justice in England and
Wales
"Court Hearing" the hearing of the Court to sanction the
Scheme and confirm the Capital Reduction
"Court Meeting" the meeting of the Scheme Shareholders
to be convened by order of the Court pursuant
to Part 26 of the 2006 Act to consider
and, if thought fit, approve the Scheme
including any adjournment hearing
"Court Order" the order of the Court sanctioning the
Scheme under Section 899 of the 2006 Act,
and confirming the Capital Reduction, to
be granted at the Court Hearing
"CWI" Clipper Windpower, Inc., a wholly-owned
subsidiary of Clipper
"Data Rooms" the electronic data rooms prepared by Clipper
for UTC in connection with both UTC's original
investment in the Company (as at 10 December
2009) and in connection with the Acquisition
(as at 13 October 2010)
"Disclosed" disclosed in (i) the annual report and
accounts of Clipper for the financial year
ended 31 December 2009 or the interim results
of Clipper for the 6 months ended 30 June
2010, (ii) any public announcement by or
on behalf of Clipper on or before 5 p.m.
on 15 October 2010 (by the delivery of
an announcement to a Regulatory Information
Service), or (iii) the Data Rooms and any
documents or information delivered in writing
(or by email) to UTC (including its directors
and employees) between 20 August 2010 and
15 October 2010 (both dates inclusive),
solely and directly in connection with
the due diligence exercise conducted by
UTC for the Acquisition
"Effective Date" the date on which the Acquisition becomes
effective in accordance with the terms
of the Scheme
"Executive" any employee of the Clipper Group identified
in the document entitled "Implementation
Agreement - Executive List" located at
Project Bruin>Shared Documents>4.0 Benefits
Compensation in the electronic data room
prepared by Clipper for UTC in connection
with the Acquisition
"Facility" has the meaning given to it in paragraph
11 of this announcement
"Financial Services the Financial Services Authority in its
Authority" capacity as the competent authority for
the purposes of Part VI of the Financial
Services and Markets Act 2000
"General Meeting" the general meeting of Shareholders to
be held immediately after the Scheme Meeting
for the purposes of implementing the Scheme
"Governmental Body" any government, government department, or
governmental, quasi-governmental, supranational,
statutory, regulatory, environmental or
investigative body, institution or authority
(including any anti-trust or merger control
body) or any court
"Group" in relation to any person, its subsidiaries,
subsidiary undertakings and holding companies
and the subsidiaries and subsidiary undertakings
of any such holding company
"HSR Act" the United States Hart-Scott Rodino Antitrust
Improvements Act of 1976, as amended, and the
rules and regulations promulgated thereunder
"Implementation Agreement" the implementation agreement entered into
between UTC and Clipper on the date of
this announcement relating to the Acquisition
"Independent Clipper the independent directors of Clipper being
Directors" each of Mauricio F. Quintana, Michael E.
Keane, Albert J. Baciocco, Jr., Anthony
R.C. Durrant and Sidney L. Tassin
"Japan" Japan, its cities and prefectures, territories
and possessions
"London Stock Exchange" London Stock Exchange plc
"Long Stop Date" 31 January 2011
"Material Adverse a change, effect, event, occurrence, state of
Effect" facts or development that will, or would
reasonably be expected to, result in an
incremental cash expense or loss of profit,
irrespective of whether such amount has been
provided for in reserves or included in
forecasts for the Clipper Group of US$50,000,000
or greater;
"Registrar of Companies" the Registrar of Companies in England and
Wales
"Re-organisation the time and date specified as such in
Record Time" the Scheme Document, expected to be 6.00
p.m. on the Business Day immediately preceding
the Court Hearing
"Restricted Jurisdiction" Canada, Australia or Japan and any other
jurisdiction into which it would be unlawful
to make the Acquisition
"Scheme" the proposed scheme of arrangement of Clipper
under Part 26 of the Act to implement the
Acquisition, with or subject to any
modification, addition or condition thereto
approved or imposed by the Court and agreed by
UTC and Clipper
"Scheme Document" the document to be despatched to Clipper
Shareholders in relation to the Scheme
including, amongst other things, the particulars
required by section 897 of the Act and the
notices of the Scheme Meeting and the General
Meeting
"Scheme Meeting" the meeting of the Scheme Shareholders
to be convened by an order of the Court
under section 896 of the Act to consider
and, if thought fit, approve the Scheme
(with or without amendment) and any adjournment
thereof
"Scheme Resolutions" the resolutions to be proposed at the Court
Meeting and the General Meeting to approve,
amongst other things, the Scheme
"Scheme Shareholders" the holders of the Scheme Shares
"Scheme Shares" (a) the Clipper Shares in issue at the
date of the Scheme Document;
(b) any Clipper Shares issued after the
date of the Scheme Document but before
the Scheme Voting Record Time; and
(c) any Clipper Shares issued at or after
the Scheme Voting Record Time but before
the Re-organisation Record Time in respect
of which the original or any subsequent
holders thereof are, or shall have agreed
in writing to be, bound by the Scheme,
in each case other than any Clipper Shares
beneficially owned by UTC or any subsidiary
undertaking of UTC
"Scheme Voting Record the time and date specified in the Scheme
Time" Document by reference to which entitlement
to vote on the Scheme will be determined,
expected to be 6.00 p.m. on the second
day before the Scheme Meeting or, if the
Scheme Meeting is adjourned, 6.00 p.m.
on the second day before the date of such
adjourned Scheme Meeting
"Share Plan" Clipper's 2005 Unapproved Executive Share
Option Plan
"Standstill Provision" has the meaning given to it in paragraph
19 of this announcement
"Subscription Agreement the agreement to subscribe for shares in
" Clipper entered into between UTC and Clipper
on 10 December 2009
"Substantial Transaction" a "Substantial Transaction" under the AIM
Rules
"Takeover Offer " a takeover offer as that term is defined
in section 974 of the Act
"Third Party Transaction" any offer, possible offer, tender offer, merger,
acquisition, scheme of arrangement, dual listed
company structure or proposal or indication of
interest from, or on behalf of, any person other
than UTC (or a wholly-owned subsidiary of UTC),
whether or not subject to any pre-conditions and
howsoever to be implemented, with a view to such
person, directly or indirectly, acquiring (in
one transaction or a series of transactions) (i)
more than 10 per cent. of the issued or enlarged
share capital of Clipper (as the case may be) or
(ii) a material part of the Wider Clipper
Group's business or assets;
"UK Takeover Panel" the Panel on Takeovers and Mergers
"United Kingdom" the United Kingdom of Great Britain and
or "UK" Northern Ireland
"United States" or the United States of America, its territories
"US" and possessions, any State of the United
States of America and the District of Columbia
"UTC" United Technologies Corporation
"UTC Group" UTC, its subsidiaries and subsidiary
undertakings
"Wider Clipper Group" Clipper, its subsidiaries, subsidiary
undertakings and associated undertakings and any
other body corporate, partnership, joint venture
or person in which Clipper and such undertakings
(aggregating their interests) have a direct or
indirect interest of 20 per cent. or more of the
voting or equity capital or the equivalent.
For the purposes of this announcement, "subsidiary", "subsidiary
undertaking", "undertaking" and "associated undertaking" have the
respective meanings given thereto by the Act.
All the times referred to in this announcement are London times
unless otherwise stated.
References to the singular include the plural and vice
versa.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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