EDC Voluntary Delisting Tender Offer September 2018
DISCLAIMER This presentation contains certain “forward looking statements.” These forward looking statements include words or phrases such as EDC or its management “believes”, “expects”, “anticipates”, “intends”, “plans”, “foresees”, or other words or phrases of similar import. Similarly, statements that describe EDC’s objectives, plans or goals also are forward-looking statements. All such forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Such forward looking statements are made based on management’s current expectations or beliefs as well as assumptions made by, and information currently available to, management. EDC does not make expressed or implied representations or warranties as to the accuracy and completeness of the information contained herein and shall not accept any responsibility or liability (including any third party liability) for any loss or damage, whether or not arising from any error or omission in compiling such information or as a result of any party’s reliance or use of such information. The information and opinions in this presentation are subject to change without notice. This presentation does not constitute a prospectus or other offering memorandum in whole or in part. Information contained in this presentation is a summary only and is prepared for discussion purposes and is not a complete record of the discussions. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy any security. There shall be no sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to qualification under securities laws of such state or jurisdiction. By receiving this presentation, each investor is deemed to represent that it is a sophisticated investor and possesses sufficient investment expertise to understand the risks involved. Prospective investors should undertake their own assessment with regard to their investment and they should obtain independent advice on any such investment’s suitability, inherent risks and merits and any tax, legal and accounting implications which it may have for them. The Tender Offer Report (SEC Form 19-1) relating to the Tender Offer has not been filed by the Company with the Securities and Exchange Commission (SEC). Nothing herein should be construed as a solicitation for an offer or an offer by the Company to buy or purchase any of the common shares of the Company until the Tender Offer Report has been filed by the Company with the SEC. This document is not the Tender Offer Report and is intended only to provide additional information to shareholders of the Company based on information relating to the Tender Offer publicly available with the SEC and the PSE.
About the Delisting Tender Offer EDC has announced its intention to conduct a voluntary delisting tender offer for up to 2,040,006,713 Delisting Tender Offer common shares 1 (all remaining common shares held by the public) representing approximately 10.9% of total outstanding common shares EDC is offering a price of ₱ 7.25 per share to EDC shareholders. This price is a premium of 46% over the Tender Offer Price closing share price of ₱ 4.95 per share on 7 August 2018 and a 40% premium over the three month VWAP 2 The tender offer will commence at 9:00am on 24 September 2018 and end at 12:00pm on 22 October Offer Period 2018 ( Tender Offer Period ) 3 The Tender Offer is subject to (among other conditions) a minimum of 1,162,000,000 common shares Conditions being tendered and eligible for acceptance by EDC through the Tender Offer, which will reduce the percentage of shares held by the public from 10.9% to less than 5.0%, and in turn, allow a voluntary delisting of the company (subject to PSE approval) (the Threshold Condition ) 4 EDC is expected to be delisted from the Philippine Stock Exchange ( PSE ) in November 2018 following the Delisting of EDC completion of the delisting tender offer (and approval of the voluntary delisting by the PSE) 1. Represent total common shares held by all shareholders other than Red Vulcan Holdings Corporation, First Gen Corporation, Northern Terracotta Power Corp. and Philippines Renewable Energy Holdings Corporation; Red Vulcan Corporation and Northern Terracotta Power Corp. are wholly-owned subsidiaries of First Gen Corporation 2. Volume Weighted Average Price 3. EDC can extend the Tender Offer Period (with prior approval from the SEC), which may result in a delay in the delisting of EDC 4. EDC reserves the right to waive or otherwise dispense with the condition
Delisting of EDC Delisting of EDC In September 2017, Philippines Renewable Energy Holdings Corporation (PREHC) completed a tender offer to acquire 8.9 billion common shares, representing 47.5% of total outstanding common shares of EDC At that time, PREHC and First Gen Corporation (First Gen) communicated to the market their intentions to eventually delist EDC and, where permissible, for EDC to undertake a tender offer that would lead to the voluntary delisting of the company from the PSE This is part of PREHC’s and First Gen’s plans to pursue a corporate strategy for EDC that will require greater flexibility over factors like its dividend policy and leverage, to support EDC’s long-term growth Trading common shares EDC common shares are expected to be delisted from the PSE in November 2018 following the completion of the tender offer (and approval of the voluntary delisting by the PSE) Once delisted, EDC common shares will no longer be traded on the PSE, which could impact investors’ ability to liquidate their investment in the future The sale and transfer of shares following the delisting may also be subject to15% capital gains tax and documentary stamp tax, which are substantially higher than the stock transaction tax of 0.6% applicable on gross proceeds when selling shares through the PSE
An opportunity for minority shareholders to realize their investment at a significant premium to the current share price 7.18 7.25 7.25 33% 1% - 30% 46% 40% 5.58 5.47 5.18 4.95 Delisting Offer Price PREHC Offer Price Last close 3-month VWAP 6-month VWAP Value from fairness (Aug 2018) (Aug 2017) (7 Aug 2018) opinion report 1. Source: Bloomberg as of 7 August 2018; IFA Fairness opinion report. The Bidder has engaged KPMG, an independent financial advisor, to give a fairness opinion on EDC. The IFA was of the opinion that the range of fair value of the listed EDC common shares is from ₱5.58 per share to ₱7.18 per share
Key takeaways An opportunity for shareholders to realize their investment at ₱7.25 per share, a premium to the pre-Tender Offer share price Tender Offer Report may be downloaded at https://www.energy.com.ph/delisting-tenderoffer/ The Offer begins at 9:00am on 24 September 2018 and ends at 12:00pm on 22 October 2018 1 1. EDC can extend the Tender Offer Period (with prior approval from SEC), which may result in a delay in the delisting of EDC
Delisting offer timeline and summary of key terms Publication of Notice of Filing and distribution of End of Delisting Delisting Tender Intent to make a tender Tender Offer Report to Tender Offer Delisting of EDC Offer starts offer shareholders period 9 Aug …………. 24 Sept 22 Oct Q4 2018 Key transaction terms Target Company Energy Development Corporation ₱ 7.25 per share Delisting Tender Offer Price Delisting Tender Offer Period 9:00am on 25 September 2018 – 12:00pm on 22 October 2018 1 Up to 2,040,006,713 common shares of EDC (all remaining common shares held by the public) 2 Tender Offer Shares The Tender Offer is subject to (among other conditions) a minimum of 1,162,000,000 common shares being tendered and eligible for acceptance by EDC through the Tender Offer, which will reduce the percentage of shares held by the public from Conditions 10.9% to less than 5.0%, and in turn, allow a voluntary delisting of the company (subject to PSE approval) (the Threshold Condition ) 3 1. EDC can extend the Tender Offer Period (with prior approval from the SEC), which may result in a delay in the delisting of EDC 2. EDC’s major shareholders include Red Vulcan Holdings Corporation, First Gen Corporation, Northern Terracotta Power Corp. and PREHC, who will not be participating in the Tender Offer 3. EDC reserves the right to waive or otherwise dispense with the condition
More information For more information, shareholders can visit: https://www.energy.com.ph/ delisting-tenderoffer /
END OF PRESENTATION www.energy.com.ph
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