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An Open Letter To Finavera Energy Shareholders, Management And The Board 75 comments
Fellow Shareholders, respected board members and senior management personnel:
Today Finavera Energy (FNVRF.PK) announced the sale of its British Colombia assets for $40M to Pattern Energy Group, while retaining its 10 percent interest in an Irish wind project. It does not take a genius to net the pro-forma assets and liabilities of the corporation and realize that the market finds the deal objectionable.
On November 16, 2012 the company reported that the offers it received ranged from an outright takeover of the company to a corporate partnership. The company's board and management have chosen neither of these options and decided to proceed with a terrible agreement that exposes Finavera to potential financing risks as only $11M will be payable from Pattern Energy Group and the remainder subject to project financing. Why should Finavera and its shareholders be exposed to such risks, when the company gains no benefits from the projects?
In addition, management and the board failed to recognize the time decay of money. In what world is $29M (the remainder) a year, or two from now is worth as much as $29M today? How can the board possibly agree to these terms?!
A strategic review should significantly decrease the discount between the market value of the company and its inherent value. After all, that is why a strategic review process is undertaken. Instead, the board managed to choose the one option that resulted in the exact opposite!
The spread between the market value of the company and its inherent value is now greater than before the deal was announced.
By selling most of the company's portfolio and retaining the cash to "pursue further high growth opportunities" the board and management are sending the wrong message to the market. Whose interests does the board exactly have in mind? In other words, management and the board decided that shareholders, whom suffered the incredible volatility and depreciation of their investment over the past year, are secondary and not primary. Management and the board have frankly betrayed shareholders and put their personal interests (their jobs) ahead of those of the company's true owners-- its shareholders.
This is not the time for arrogance and personal pride. Management and the board, who are also major shareholders, truly must see that the deal is not favorable. It exposes us to risks, but none of the benefits.
I strongly urge you fellow shareholders to express your dismay and aversion to the deal announced today by making your voice heard loud and clear. Let the company know you will vote AGAINST the deal, express your right as a shareholder!
Disclosure: I am long FNVRF.PK.
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This post has 75 comments:
I own 50,000 shares.
I own 25,000 shares and there is no way in hell I am voting for this horrible deal!
I am with you guys
Shareholders should combine their voting power.
I hold 120,000 shares and will vote this down.
dtmilani 10,000
martin_levi 25,000
MarginCall12 120,000
Felix Pinhasov 100,000
Total 305,000
Add me to the list, I own 40,000 shares.
I own 27,000 shares
I own 12,000 shares
I own 10,000 shares
dtmilani 10,000
martin_levi 25,000
MarginCall12 120,000
Felix Pinhasov 100,000
NickelZinc 40,000
Shahar12 12,000
what_happened 27,000
Judith_12 12,000
miketheike 10,000
New Total 406,000
Could you tell me what to do with my 75,000 shares.
How do I vote against it? I really know little about investing.
I own 40,000 shares.
Vote down the deal !!!!!!!!!!!!!!!!
add me to the list, I own 10,000 shares.
add me to the list, I own 8,000 shares and I intend to vote AGAINST this incredibly ridiculous deal.
dtmilani 10,000
martin_levi 25,000
MarginCall12 120,000
Felix Pinhasov 100,000
NickelZinc 40,000
Shahar12 12,000
what_happened 27,000
Judith_12 12,000
miketheike 10,000
ricardo123 10,000
leesangg 8,000
dr_pants_esq 30,000
New Total 454,000
Note: I've been holding on to them since 2007
I will definitely vote AGAINST this, why couldn't they just sell the company?!
I own 8,000 shares
thanks Felix!
Shares owned: 120,000
dtmilani 10,000
martin_levi 25,000
MarginCall12 120,000
Felix Pinhasov 100,000
NickelZinc 40,000
Shahar12 12,000
what_happened 27,000
Judith_12 12,000
miketheike 10,000
ricardo123 10,000
leesangg 8,000
dr_pants_esq 30,000
ali1t 30,000
LiranAngry 8,000
washingsocks 120,000
New Total 612,000
every vote count!!!
Please continue gathering other shareholders.
p.s. I got found your letter through stockhouse.com
I have a few friends who are also invested in FVR, so I will circulate this thread onto them.
There are 37.4M shares outstanding, correct?
I own 66000 shares
100 000
sandylast 50,000
dtmilani 10,000
martin_levi 25,000
MarginCall12 120,000
Felix Pinhasov 100,000
NickelZinc 40,000
Shahar12 12,000
what_happened 27,000
Judith_12 12,000
miketheike 10,000
ricardo123 10,000
leesangg 8,000
dr_pants_esq 30,000
ali1t 30,000
LiranAngry 8,000
washingsocks 120,000
Betrayed Shareholder 15,000
carter18 100,000
sabrina159 20,000
wandzy 64,000
8mileman 13,300
fvruser 66,000
the slice 15,000
dasc 100,000
slippery_pete 26000
New Total 1,031,300
(yes wendzy, you are corret)
I will vote against this deal.
I will vote against any FVR employee stock option plan.
The business model of this company is broken and
capital should be return to its shareholders and not to
an entrenched management team.
As shareholders we have the absolute right to vote on the 4 plus offers that range from a full takeover to a partnership.
Don't despair, Don't give up!
These last few years it has been difficult to get financial backing for low cap companies in every sector, at least we never went bankrupt.
If there comes a better offer I believe we will get the payout most seem to want. Our value is currently approximately 3 times our current share price if not more.
You may never get a chance to vote on this deal as more deals will most likely come in early 2013. IMHO
Not management. If investors wish to invest in the sector, they can do so with the proceeds.
There were 4+ offers on the table, and at least one was a full on takeover. We have the right to choose.
They stubbed us in the back...horrible management, horrible board
I don't own much, by I will vote this DOWN
add me please: 12,000 shares
Thx Felix
I own 7,000 shares and will vote AGAINST the deal
Add my 5,000 shares to the cause.
For example:
- special dividend of 50cents per share
- share buy back plan up to 1dollar to a max of 50% of the float
- share distribution for current share holder 1 for 1. That would value the stock over 1dollar.
Management totally screwed shareholders. I held a small amount but sold out at .43cents.
ReduceCo2
I am not in the States.HOw can I vote against it now?
I would like to join the list. How do I vote against this? I am an ignorant investor. please tell me what to do somebody.
Addressing your concerns:
1. You will be able to vote against the deal no matter where you are in the world. Its early days and I hope we won't have to waste precious cash on a useless vote.
2. I will provide you with detailed instructions on how to vote your proxy.
3. I believe most of us are Canadian, including yours truly. If your not, that's absolutely does not matter. You own a share, you get to vote!
The CEO and I have been in contact through email and are scheduled to talk over the phone.
I will push for the following:
1. a conference call (ASAP) with a Q&A session
2. the dates in which the company will recieve the remaining $29M
3. the disclosure of the number and substance of other offers.
4. THE RETURN OF CAPITAL TO SHAREHOLDERS!
I will update every shareholder immediately after the call and as a UNITED GROUP, we can take it forward from there.
As of now, our little company is trading at a market cap of about $8M or $0.23/share when the assets were sold for $40M or $1.07/share. Our concerns and objections are indeed justified.
Will FVR also dividend these proceeds to the share holders that held the stock on a certain date?
FVR retained 10% ownership on the Cloosh Valley project. I am not sure if FVR is piggy backing free on this deal or do they have to put up 10% of the financing for the project?
FVR stated "The agreement provides the best value for shareholders after the review of a number of different deal structures, assessment of execution risk and the potential for future value"
FVR........Please explain to your shareholders "Best Value" and "The potential for future value"
What we need is clarity and a good deal to be paid in full. Just can't figure out how a company with over 40 million in net assets is worth less than 10 million on paper. Talk about creative accounting.
I have spoken to the company's CEO last night and discussed a variety of issues ranging from the importance of information and transparency to the necessity of a conference call. Clearly, not announcing a conference call in the news release was a misstep, but let us not dwell on the past and look to the future.
The upcoming conference call will CLEARLY illustrates the alignment of management and the board with shareholders. It will also illustrate Pattern's expertise in developing wind farm facilities and ability to access capital. This is important since future cash payments depend on, partially, on Pattern Energy.
If you have any questions, or need further clarifications I strongly urge you to email the company and request to speak with Mr. Bak, Finavera's chief executive and founder. He will answer your questions as long as it does not entail insider information.
I look forward to the conference call and your constructive feedback.
http://bit.ly/12LeXqa
i´m a german shareholder, holding 18K ;
count my shares if you wish;
also i ´m voting no, reg. the knowing circumstances.
elsolivars
,
,
New Total: 1,289,200
Unfortunately the company cornered itself with debt payable to GE (we all know who's fault that is), which inhibited the auction process in the time available to let other potential bidders conduct the necessary due diligence. Voting against (if even possible, since the company is majority owned by several shareholders) the deal leaves current shareholders in danger of excessive dilution and is therefore not a viable path. Voting FOR the transaction seems to be the only way to generate the value inherent in the company.
As for value (keep in mind these are rough estimates):
10% of Cloosh Valley (105MW) in JV with a major player in the business
$11M upon shareholder approval (2013-Q2/Q3) + $9.2M from SSE (2013-Q3/Q4) = $20.2M in 2013
$20M (out of the remaining $29M due from Pattern in 2014, per the answer to the direct question in the conference call) = $20.0M in 2014
$9M from remaining projects in the future.
Market cap is around $10M. I think the case for inherent value is strong.
Let me just higlight one point that came across in the conference call, which I think is important.
When asked on the proper model of the company (private/public), Jason (the CEO) clearly stated that he believes that the company should be private as it was in the early 2000's. He also stated that he thinks that the several shareholders who hold the majority of the shares should buy out the retail shareholders.
Make of his answer whatever you wish, but one of those shareholders is a billionaire Irishman (cloosh valley).
If the market does not recognize the value inherent in the company, the likelihood of these shareholders taking the retail holders out, grows and grows.
I will vote yes and hope for the best.
June: ratification of the agreement with Pattern, and debt forgiveness.
H2 '13: Payment for Tumbler Ridge
Q4 ' 13: Payment for Cloosh
2014: Payment for Meikle
late 2014: Shareholder vote on use of funds (possibly returned to shareholders? Merger with another RE developer to achieve scale?)
Of course, timelines have a tendency to slip, as we just saw. That might lead to additional expenses, eating up some of the proceeds, meaning $0.41 might never be achieved.
Could it go beyond $.41? Yes, if the proceeds of these transactions are invested profitably. They will achieve a 10x return on investment on Cloosh if they close this year, and wind prospects are very cheap right now.
Or if the election in BC removes some of the obstacles to Wildmare and Bullmoose.
Q2/13: $9.3MM on shrhldr approval,
Q4/13: ~$9.4MM Cloosh Valley from @sseplc,
plan H2/14: ~$19MM balance
In other words, they expect Tumbler Ridge and Miekle to close in the second half of 2014 - I thought Tumbler might close in 2013, but apparently these two are a package deal.
The first two payments, expected in 2013, should be enough to cover Finavera's outstanding liabilities.
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