REG - Drax Group Plc Harmony Energy Inc. - Offer for Harmony Energy Income Trust Plc
25/03/2025 07:15
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RNS Number : 0355C Drax Group PLC 25 March 2025
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET
ABUSE REGULATION (EU) NO 596/2014 (INCORPORATED INTO UK LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED BY VIRTUE OF THE MARKET ABUSE
(AMENDMENT) (EU EXIT) REGULATIONS 2019). UPON THE PUBLICATION OF THIS
ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS
NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
FOR IMMEDIATE RELEASE
25 March 2025
RECOMMENDED CASH ACQUISITION
of
Harmony Energy Income Trust Plc ("HEIT")
by
Drax BESS Holdco Limited ("Drax Bidco")
to be effected by means of a scheme of arrangement
under Part 26 of the Companies Act 2006
Summary
· The board of directors of each of Drax Bidco and HEIT
are pleased to announce that they have reached agreement on the terms of a
recommended cash acquisition pursuant to which Drax Bidco, a wholly-owned
subsidiary undertaking of Drax, will acquire the entire issued ordinary share
capital of HEIT (the "Acquisition"). The Acquisition is intended to be
effected by means of a scheme of arrangement under Part 26 of the Companies
Act.
· Under the terms of the Acquisition, HEIT Shareholders
shall be entitled to receive:
for each Scheme Share: 88.0 pence in cash
· The Consideration per Scheme Share values the entire
issued share capital of HEIT at approximately £199.9 million and represents a
premium of approximately:
o 5 per cent. to the Foresight possible offer of 84.0 pence per HEIT Share
on 17 March 2025 (being the date of the Foresight Rule 2.4 Announcement);
o 35 per cent. to the Closing Price of 65.2 pence per HEIT Share on 14 March
2025 (being the last Business Day prior to the date of the Foresight Rule 2.4
Announcement);
o 11 per cent. to the Closing Price of 79.2 pence per HEIT Share on 24 March
2025 (being the last Business Day prior to the date of this announcement);
o 84 per cent. to the Closing Price of 47.8 pence per HEIT Share on 29 May
2024 (being the last Business Day prior to the date of the announcement of
HEIT's ongoing asset sale process).
· The board of directors of each of Drax Bidco and HEIT
are also pleased to note that, in total, HEIT Shareholders (including the HEIT
Directors) representing 19.6 per cent. of HEIT's issued ordinary share capital
as at the Latest Practicable Date are supportive of the Acquisition and have
each entered into irrevocable undertakings to vote in favour of the Scheme at
the Court Meeting and the resolutions to be proposed at the General Meeting.
Strategic rationale for the Acquisition
· Drax believes that the Acquisition represents a highly
attractive opportunity, one which is complementary to the Wider Drax Group's
existing FlexGen portfolio. HEIT, a publicly listed investment trust set up to
acquire ready-to-build battery energy storage system ("BESS") assets,
represents a compelling opportunity to add operating BESS assets to the Wider
Drax Group's FlexGen portfolio, offering the following key benefits:
· ability to perform daily cycling to capture the spread between
overnight prices and peaks as well as benefit from market volatility events;
· provides access to additional ancillary services markets by
adding rapid and short duration response capability; and
· complements Drax's existing 24/7 trading capability operating
across wholesale, balancing and ancillary service markets.
· Drax views HEIT as a highly attractive large scale UK
BESS portfolio, comprised entirely of two-hour fully operational, cash
generative assets which can operate standalone today and allow for the future
potential in-sourcing of trading and optimisation. Drax expects that return on
invested capital from the Acquisition will significantly exceed the Wider Drax
Group's target weighted average cost of capital.
Recommendation
· The HEIT Directors, who have been so advised by Panmure
Liberum as to the financial terms of the Acquisition, consider the terms of
the Acquisition to be fair and reasonable. In providing its advice to HEIT
Directors, Panmure Liberum has taken into account the commercial assessments
of the HEIT Directors. Panmure Liberum is providing independent financial
advice to the HEIT Directors for the purposes of Rule 3 of the Code.
· Accordingly, the HEIT Directors intend to recommend
unanimously that HEIT Shareholders vote in favour of the Scheme at the Court
Meeting and the resolutions to be proposed at the General Meeting as the HEIT
Directors have irrevocably undertaken to do in respect of their own beneficial
holdings of 101,116 HEIT Shares representing, in aggregate, approximately 0.04
per cent. of the ordinary share capital of HEIT in issue on the Latest
Practicable Date.
Irrevocable undertakings
· As noted above, Drax Bidco has received irrevocable
undertakings from each of the HEIT Directors to vote in favour of the Scheme
at the Court Meeting and the resolutions to be proposed at the General
Meeting, in respect of a total of 101,116 HEIT Shares, representing
approximately 0.04 per cent. of the existing issued ordinary share capital of
HEIT on the Latest Practicable Date.
· Drax Bidco has also received irrevocable undertakings
to vote in favour of the Scheme at the Court Meeting and the resolutions to be
proposed at the General Meeting from HEIT Shareholders in respect of a total
of 44,448,634 HEIT Shares representing, in aggregate, approximately 19.6 per
cent. of HEIT's existing issued ordinary share capital on the Latest
Practicable Date.
· Drax Bidco has therefore received irrevocable
undertakings in respect of a total of 44,549,750 HEIT Shares representing, in
aggregate, approximately 19.6 per cent. of HEIT's ordinary share capital in
issue on the Latest Practicable Date.
Information on Drax Bidco and Drax
· Drax is a renewable energy company engaged in renewable
power generation, the production of sustainable biomass and the sale of
renewable electricity to businesses.
· Drax operates a generation portfolio of sustainable
biomass, hydro-electric and pumped storage hydro assets in England and
Scotland and is developing three open cycle gas turbine assets, two in England
and one in Wales. Drax's Energy Solutions business sells renewable electricity
to industrial and commercial customers in the UK. The Wider Drax Group also
operates a biomass pellet production business with 18 operational and
development sites for a combination of own-use and third-party sales, from
existing and new markets, including Sustainable Aviation Fuel (SAF), where
Drax is developing a pipeline of biomass sales opportunities in North America,
Asia and Europe.
· The Wider Drax Group employs over 3,200 people in the
UK, US, Canada and Japan. The Wider Drax Group had total revenue of £6,163
million in 2024 and adjusted EBITDA of £1,064 million.
· Drax Bidco was incorporated on 27 December 2024 and is
a wholly-owned subsidiary undertaking of Drax. It has not traded since its
date of incorporation, nor has it entered into any obligations other than in
connection with the Acquisition.
Timetable and Conditions
· It is intended that the Acquisition will be implemented
by way of a scheme of arrangement between HEIT and HEIT Shareholders under
Part 26 of the Companies Act (although Drax Bidco reserves the right to
implement the Acquisition by way of a Takeover Offer, subject to the Panel's
consent and compliance with the Code).
· The Acquisition is conditional on, among other things,
the approval of the requisite majority of HEIT Shareholders at the Court
Meeting and at the General Meeting. In order to become Effective, the Scheme
must be approved by a majority in number of the HEIT Shareholders voting at
the Court Meeting, either in person or by proxy, representing at least 75 per
cent. in value of the HEIT Shares voted. In addition, a special resolution
implementing the Scheme must be passed by HEIT Shareholders representing at
least 75 per cent. of votes cast at the General Meeting. Following the Court
Meeting, the Scheme must also be sanctioned by the Court.
· For the purposes of Rule 29.1(d) of the Code a
valuation of HEIT's portfolio will be included in the Scheme Document or, if
applicable, the offer document.
· The Acquisition is also subject to the Conditions and
terms set out in Appendix I to this announcement, including, amongst other
things, the receipt of regulatory approval from the Secretary of State
pursuant to the NSI Act, as further described in this announcement.
· Subject to the satisfaction or (where applicable)
waiver of the Conditions, the Acquisition is expected to become Effective
around the end of Q2 2025.
· The Scheme Document, containing further information about
the Acquisition and the Scheme, including a valuation report on HEIT's
portfolio in accordance with Rule 29 of the Code, and notices of the Court
Meeting and the General Meeting, will be distributed to HEIT Shareholders
(along with the Forms of Proxy for use in connection with the Court Meeting
and the General Meeting) as soon as reasonably practicable and within 28 days
of this announcement. The Scheme Document will also be made available by HEIT
on its website at www.heitp.co.uk/investors/proposed-offer-from-drax
(http://www.heitp.co.uk/investors/proposed-offer-from-drax) .
Commenting on the Acquisition, Norman Crighton, the Non-Executive Chair of
HEIT, said:
"Since its launch in November 2021, HEIT has assembled a fully operational
portfolio of eight 2-hour BESS projects totalling 790.8 MWh / 395.4 MV, which
have attracted a strong level of interest through both our recent Asset Sale
process and now through a potential bid from Foresight and the recommended
offer by Drax.
The HEIT Board believes that value to HEIT Shareholders will be maximised
through the terms of the Acquisition. Further, the HEIT Board believes that
the Acquisition will provide HEIT Shareholders with the opportunity to realise
the value of their holdings, in cash, at an attractive value which is in
excess of the reasonable medium-term prospects for HEIT on a standalone basis
as a listed company."
Commenting on the Acquisition, Will Gardiner, the Chief Executive Officer of
Drax Group plc, said:
"The Acquisition is a significant investment in growing our FlexGen portfolio,
supporting UK energy security and delivering a clean power system.
The Drax Directors believe that adding battery storage to our FlexGen
portfolio enables us to provide even more secure power to the country when it
is needed. In combination with our long duration storage, flexible generation,
demand side response capabilities and renewable generation from biomass, we
will be able to supply 4.5GW of dispatchable generation to meet demand.
As more intermittent renewable energy connects to the country's network, more
dispatchable and reliable generation will be required to help keep the lights
on when the wind isn't blowing or the sun isn't shining.
We are working to create value and growth in the short, medium and long-term,
aligned to the UK's energy needs, and which the Drax Directors believe is
underpinned by strong cash generation, a disciplined approach to capital
allocation and attractive returns for shareholders."
This summary should be read in conjunction with the full text of this
announcement. The Acquisition shall be subject to the Conditions and further
terms set out in Appendix I to this announcement and to the full terms and
conditions which shall be set out in the Scheme Document. Appendix II to this
announcement contains the sources of information and bases of calculations of
certain information contained in this announcement, Appendix III contains a
summary of the irrevocable undertakings received in relation to this
Acquisition and Appendix IV contains definitions of certain expressions used
in this summary and in this announcement.
This announcement contains inside information as defined in the Market Abuse
Regulation. Upon the publication of this announcement via a Regulatory
Information Service, such inside information will be considered to be in the
public domain. The person responsible for making this announcement on behalf
of HEIT is Susan Fadil of the Company Secretary, JTC (UK) Limited and the
person responsible for making this announcement on behalf of Drax is Brett
Gladden, Company Secretary.
Enquiries:
Drax and Drax Bidco
Enquiries:
Drax Investor Relations:
Mark Strafford
mark.strafford@drax.com
+44 (0) 7730 763 949
Chris Simpson
Chris.Simpson@drax.com
+44 (0) 7923 257 815
Media:
Drax External Communications:
Chris Mostyn
Chris.Mostyn@drax.com
+44 (0) 7743 963 483
J.P. Morgan Cazenove (Financial Adviser and Corporate Broker to Drax and Drax +44 (0)20 3493 8000
Bidco)
Robert Constant
James Robinson
Alia Malik
Rupert Budge
FTI Consulting (PR Adviser to Drax and Drax Bidco)
Kate Brader +44 (0)79 2918 1850
Senior Managing Director / Partner +44 (0)20 3727 1539
FTI Consulting
kate.brader@fticonsulting.com
HEIT Via Panmure Liberum Limited
Norman Crighton, Chairman
Panmure Liberum (Financial Adviser, Rule 3 Adviser and Joint Broker to HEIT) +44 (0)20 3100 2222
Corporate Finance:
Chris Clarke
Darren Vickers
Will King
M&A:
Tim Medak
Stifel (Joint Broker to HEIT) Tel: +44 (0)20 7710 7600
Mark Young
Edward Gibson-Watt
Rajpal Padam
Madison Kominski
Camarco (PR Adviser to HEIT) Tel: +44 (0)20 3757 4980
Eddie Livingstone-Learmonth
Andrew Turner
Pinsent Masons LLP is acting as legal adviser to Drax Bidco and Drax, and
Gowling WLG (UK) LLP is acting as legal adviser to HEIT, in connection with
the Acquisition.
Important notices
J.P. Morgan Securities plc, which conducts its UK investment banking business
as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised in the United
Kingdom by the PRA and regulated in the United Kingdom by the PRA and the FCA.
J.P. Morgan Cazenove is acting as financial adviser exclusively for Drax Bidco
and Drax and no one else in connection with the matters set out in this
announcement and will not regard any other person as its client in relation to
the matters in this announcement and will not be responsible to anyone other
than Drax Bidco and Drax for providing the protections afforded to clients of
J.P. Morgan Cazenove or its affiliates, nor for providing advice in relation
to any matter referred to herein.
Panmure Liberum Limited ("Panmure Liberum"), which is authorised and regulated
by the Financial Conduct Authority in the United Kingdom, is acting
exclusively as financial adviser, Rule 3 adviser and joint broker to HEIT and
no one else in connection with the Acquisition and the matters and
arrangements set out in this announcement. Panmure Liberum will not regard any
other person as its client in relation to the Acquisition or any other matter
or arrangement set out in this announcement and will not be responsible to
anyone other than HEIT for providing the protections afforded to clients of
Panmure Liberum, nor for providing advice in relation to the Acquisition or
any other matter or arrangement referred to in this announcement. Neither
Panmure Liberum nor any of its affiliates (nor their respective directors,
officers, employees or agents) owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, consequential, whether
in contract, in tort, in delict, under statute or otherwise) to any person who
is not a client of Panmure Liberum in connection with the Acquisition, this
announcement, any statement contained herein or otherwise. No representation
or warranty, express or implied, is made by Panmure Liberum as to the contents
of this announcement.
Stifel Nicolaus Europe Limited ("Stifel"), which is authorised and regulated
by the Financial Conduct Authority in the United Kingdom, is acting
exclusively as joint broker to HEIT and no one else in connection with the
Acquisition and the matters and arrangements set out in this announcement.
Stifel will not regard any other person as its client in relation to the
Acquisition or any other matter or arrangement set out in this announcement
and will not be responsible to anyone other than HEIT for providing the
protections afforded to clients of Stifel, nor for providing advice in
relation to the Acquisition or any other matter or arrangement referred to in
this announcement. Neither Stifel nor any of its affiliates (nor their
respective directors, officers, employees or agents) owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect,
consequential, whether in contract, in tort, in delict, under statute or
otherwise) to any person who is not a client of Stifel in connection with the
Acquisition, this announcement, any statement contained herein or otherwise.
No representation or warranty, express or implied, is made by Stifel as to the
contents of this announcement.
Further information
This announcement is for information purposes only and is not intended to and
does not constitute, or form part of, an offer to sell or an invitation to
purchase any securities or the solicitation of an offer to buy, otherwise
acquire, subscribe for, sell or otherwise dispose of any securities, pursuant
to the Acquisition or otherwise, nor shall there be any purchase, sale,
issuance or exchange of securities or such solicitation in any jurisdiction in
which such offer, invitation, solicitation, purchase, sale, issuance or
exchange is unlawful.
The Acquisition shall be made solely by means of the Scheme Document (or, if
the Acquisition is implemented by way of a Takeover Offer, any document by
which the Takeover Offer is made) which, together with the Forms of Proxy (or
forms of acceptance, if applicable), shall contain the full terms and
conditions of the Acquisition, including details of how to vote in respect of
the resolutions proposed in connection with the Acquisition. Any vote,
approval, decision in respect of, or other response to, the Acquisition should
be made only on the basis of the information contained in the Scheme Document
(or if the Acquisition is to be implemented by way of a Takeover Offer, the
offer document).
The statements contained in this announcement are made as at the date of this
announcement, unless some other time is specified in relation to them, and the
release of this announcement shall not give rise to any implication that there
has been no change in the facts set out in this announcement since such date.
This announcement has been prepared for the purpose of complying with English
law , the Code, the Market Abuse Regulation and the Disclosure Guidance and
Transparency Rules, 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 England and Wales. The
Acquisition will be subject to the applicable requirements of the Code, the
Panel, the London Stock Exchange and the Financial Conduct Authority.
HEIT will prepare the Scheme Document to be distributed to HEIT Shareholders.
The Acquisition will be implemented solely pursuant to the terms of the Scheme
Document (or, in the event that the Acquisition is to be implemented by means
of a Takeover Offer, the Offer Document), which, together with the Forms of
Proxy, will contain the full terms and conditions of the Acquisition,
including details of how to vote in respect of the Acquisition. HEIT
Shareholders are advised to read the Scheme Document (including the related
Forms of Proxy) (and/or, in the event that the Acquisition is to be
implemented by way of a Takeover Offer, the Offer Document) carefully once
these become available because they will contain important information in
relation to the Acquisition. Any vote in respect of resolutions to be proposed
at the General Meeting, and any decision in respect of the Scheme or other
response in relation to the Acquisition by HEIT Shareholders should be made
only on the basis of the information contained in the Scheme Document (and/or,
in the event that the Acquisition is to be implemented by way of a Takeover
Offer, the Offer Document).
This announcement contains inside information in relation to each of HEIT and
Drax for the purposes of Article 7 of the Market Abuse Regulation. The person
responsible for making this announcement on behalf of HEIT is Susan Fadil of
the Company Secretary, JTC (UK) Limited and the person responsible for making
this announcement on behalf of Drax is Brett Gladden, Company Secretary.
This announcement does not constitute a prospectus or prospectus exempted
document.
Drax Bidco reserves the right to elect (with the consent of the Panel) to
implement the Acquisition by way of a Takeover Offer as an alternative to the
Scheme. In such event, the Takeover Offer will be implemented on substantially
the same terms, so far as applicable, as those which would apply to the
Scheme, subject to appropriate amendments to reflect the change in structure
by which the Acquisition is to be implemented and compliance with all
applicable laws.
Overseas shareholders
The release, publication or distribution of this announcement in or into
certain jurisdictions other than the United Kingdom may be restricted by the
laws and/or regulations of those jurisdictions. Persons into whose possession
this announcement comes who are not resident in the United Kingdom or who are
subject to the laws and/or regulations of any jurisdiction other than the
United Kingdom should inform themselves of, and observe, any such applicable
laws and/or regulations in their jurisdiction. In particular, the ability of
persons who are not resident in the United Kingdom to vote their HEIT Shares
with respect to the Scheme at the Court Meeting or the resolution(s) at the
General Meeting, or to appoint another person as proxy to vote at the Court
Meeting or the General Meeting on their behalf, may be affected by the laws of
the relevant jurisdiction in which they are located. Further details in
relation to Overseas Shareholders will be contained in the Scheme Document.
Any failure to comply with any such restrictions may constitute a violation of
the securities laws of any such jurisdiction. To the fullest extent permitted
by applicable law, the companies and persons involved in the Acquisition
disclaim any responsibility or liability for the violation of such
restrictions by any person.
Unless otherwise determined by Drax Bidco or required by the Code, and
permitted by applicable law and regulation, the Acquisition shall not be made
available, directly or indirectly, in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction and no person may
vote in favour of the Acquisition by any such use, means, instrumentality or
form within a Restricted Jurisdiction or any other jurisdiction if to do so
would constitute a violation of the laws of 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 where to do so
would violate the laws in that jurisdiction. If the Acquisition is implemented
by a Takeover Offer (unless otherwise permitted by applicable law or
regulation), the Takeover Offer may not be made, directly or indirectly, in or
into or by use of the mails or any other means or instrumentality (including,
without limitation, facsimile, email or other electronic transmission, telex
or telephone) of interstate or foreign commerce of, or any facility of a
national state or other securities exchange, of any Restricted Jurisdiction
and the Takeover Offer will not be capable of acceptance by any such use,
means, instrumentality or facilities or from or within any Restricted
Jurisdiction.
The availability of the Acquisition to HEIT Shareholders who are not resident
in the United Kingdom 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.
Additional Information for HEIT Shareholders Resident in the United States
HEIT Shareholders resident in the United States should note that the
Acquisition relates to the shares of an English company and is being made by
means of a scheme of arrangement provided for under, and governed by, the law
of England and Wales. A transaction effected by means of a scheme of
arrangement is not subject to the tender offer rules or the proxy solicitation
rules under the US Securities Exchange Act of 1934, as amended (the "US
Exchange Act"). Accordingly, the Acquisition is subject to the disclosure and
procedural requirements and practices applicable in the United Kingdom to
schemes of arrangement which differ from the disclosure requirements of United
States tender offer and proxy solicitation rules. If, in the future, Drax
Bidco exercises the right to implement the Acquisition by way of a Takeover
Offer and determines to extend the Takeover Offer into the United States, the
Acquisition will be made in compliance with applicable United States laws and
regulations, including Section 14(e) of the US Exchange Act and Regulation 14E
thereunder. Any such Takeover Offer would be made in the United States by Drax
Bidco and no one else.
Financial information included in this announcement and the Scheme Document
has been or will have been prepared in accordance with accounting standards
under UK-adopted international accounting standards and in accordance with
International Financial Reporting Standards ("IFRS") and thus may not be
comparable to financial information of US companies or companies whose
financial statements are prepared in accordance with generally accepted
accounting principles in the United States.
The receipt of cash pursuant to the Acquisition by a US holder of HEIT Shares
as consideration for the transfer of its Scheme Shares pursuant to the Scheme
may be a taxable transaction for US federal income tax purposes and under
applicable US state and local, as well as foreign and other, tax laws. Each
HEIT Shareholder is therefore urged to consult with independent legal, tax and
financial advisers in connection with making a decision regarding the
Acquisition.
Drax Bidco and HEIT are each organised and located in a non-US jurisdiction
and some or all of their officers and directors may be residents of a non-US
jurisdiction. It may therefore be difficult for holders of HEIT Shares located
in the United States to enforce their rights and any claim arising out of US
securities law. It may not be possible to sue Drax Bidco and HEIT (or their
officers and directors) in a non-US court for violations of US securities
laws. Furthermore, it may be difficult to compel Drax Bidco and HEIT and their
respective affiliates to subject themselves to the jurisdiction or judgment of
a US court.
In accordance with normal UK practice and to the extent permitted under Rule
14e-5(b) of the US Exchange Act, Drax Bidco, certain affiliated companies and
their nominees or brokers (acting as agents), may from time to time make
certain purchases of, or arrangements to purchase, HEIT Shares outside of the
United States, other than pursuant to the Acquisition, until the Effective
Date, lapses or is otherwise withdrawn. If such purchases or arrangements to
purchase were to be made they would occur either in the open market at
prevailing prices or in private transactions at negotiated prices and comply
with applicable law, including English law, the Code and the US Exchange Act.
Any information about such purchases will be disclosed as required in the UK,
will be reported to the Regulatory News Service of the London Stock Exchange
and will be available on the London Stock Exchange website at
https://www.londonstockexchange.com/.
This announcement does not constitute or form a part of any offer to sell or
issue, or any solicitation of any offer to purchase, subscribe for or
otherwise acquire, any securities in the United States.
Neither the US Securities and Exchange Commission nor any securities
commission of any state of the United States has approved or disapproved the
Acquisition, passed upon the fairness of the Acquisition, or passed upon the
adequacy or accuracy of this announcement. Any representation to the contrary
is a criminal offence in the United States.
Forward looking statements
The information provided in this announcement contains certain forward-looking
statements and information (collectively, "forward-looking statements") within
the meaning of applicable securities laws. Such forward-looking statements
include, without limitation, forecasts, estimates, expectations and objectives
for future operations that are subject to assumptions, risks and
uncertainties, many of which are beyond the control of Drax Bidco or HEIT.
Forward-looking statements are predictive in nature, depend upon or refer to
future events or conditions, or include words such as "expect", "plan",
"anticipate", "believe", "intend", "maintain", "continue to", "pursue",
"design", "result in", "sustain" "estimate", "potential", "growth",
"near-term", "long-term", "forecast", "contingent" and similar expressions, or
are events or conditions that "will", "would", "may", "could" or "should"
occur or be achieved. The forward-looking statements contained in this
announcement speak only as of the date hereof and are expressly qualified by
this cautionary statement.
Forward-looking statements are based upon, among other things, factors,
expectations and assumptions that Drax Bidco and HEIT have made as at the date
of this announcement regarding, among other things: the satisfaction of the
conditions to closing of the Acquisition in a timely manner, if at all,
including the receipt of all necessary approvals; and that the Acquisition
will comply with all applicable requirements of the Code, the Panel, the
London Stock Exchange and the Financial Conduct Authority.
Undue reliance should not be placed on the forward-looking statements because
no assurance can be given that they will prove to be correct. Since
forward-looking statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. These risks include, but
are not limited to: the completion and timing of the Acquisition; the ability
of Drax Bidco and HEIT to receive, in a timely manner, the necessary
regulatory, Court, shareholder, stock exchange and other third-party approvals
and to satisfy the other conditions to closing of the Acquisition; the ability
of the parties to complete the Acquisition on the terms contemplated by Drax
Bidco and HEIT or at all; consequences of not completing the Acquisition,
including the volatility of the share prices of Drax and HEIT, negative
reactions from the investment community, and the required payment of certain
costs related to the termination of the Acquisition; and the focus of
management's time and attention on the Acquisition and other disruptions
arising from the Acquisition.
Except as may be required by applicable securities laws, neither Drax Bidco
nor HEIT assume any obligation or intent to update publicly or revise any
forward-looking statements made herein, whether as a result of new
information, future events or otherwise.
No profit forecasts, profit estimates or quantified financial benefit
statement
No statement in this announcement is intended as a profit forecast, profit
estimate or quantified financial benefit statement for any period and no
statement in this announcement should be interpreted to mean that earnings or
earnings per share for Drax or HEIT, as appropriate, for the current or future
financial years would necessarily match or exceed the historical published
earnings or earnings per share for Drax or HEIT, as appropriate.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or
more of any class of relevant securities of an offeree company or of any
securities exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following the
commencement of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified. An Opening Position
Disclosure must contain details of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any securities exchange offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no
later than 3.30 p.m. (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later than 3.30
p.m. (London time) on the 10th business day following the announcement in
which any securities exchange offeror is first identified. Relevant persons
who deal in the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening Position
Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1
per cent. or more of any class of relevant securities of the offeree company
or of any securities exchange offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or of any
securities exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s), save to the extent that
these details have previously been disclosed under Rule 8. A Dealing
Disclosure by a person to whom Rule 8.3(b) applies must be made by no later
than 3.30 p.m. (London time) on the business day following the date of the
relevant dealing.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they shall
be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Panel's website at
http://www.thetakeoverpanel.org.uk, including details of the number of
relevant securities in issue, when the offer period commenced and when any
offeror was first identified. You should contact the Panel's Market
Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether
you are required to make an Opening Position Disclosure or a Dealing
Disclosure.
Electronic communications
Please be aware that addresses, electronic addresses and certain information
provided by HEIT Shareholders, persons with information rights and other
relevant persons for the receipt of communications from HEIT may be provided
to Drax Bidco during the offer period as requested under Section 4 of Appendix
4 of the Code to comply with Rule 2.11(c) of the Code.
Publication on website and availability of hard copies
A copy of this announcement will be made available, free of charge, subject to
certain restrictions relating to persons resident in Restricted Jurisdictions,
on Drax's and HEIT's websites at www.drax.com/investors/offer and
www.heitp.co.uk/investors/proposed-offer-from-drax respectively by no later
than 12 noon (London time) on 26 March 2025. For the avoidance of doubt, the
contents of these websites are not incorporated into and do not form part of
this announcement.
HEIT Shareholders and persons with information rights may request a hard copy
of this announcement by: (i) contacting HEIT's Registrar, Computershare
Investor Services PLC, by writing to them at The Pavilions, Bridgwater Road,
Bristol BS99 6ZZ or by calling them on +44 (0)370 703 6003 during business
hours (lines are open from 9.30 a.m. to 5.30 p.m., Monday to Friday (excluding
public holidays in England and Wales)); or (ii) by submitting a request in
writing to Computershare Investor Services PLC. Calls are charged at the
standard geographical rate and will vary by provider. Calls outside the United
Kingdom will be charged at the applicable international rate. Please note that
Computershare cannot provide any financial, legal or tax advice. Calls may be
recorded and monitored for security and training purposes.
HEIT Shareholders and persons with information rights may also request that
all future documents, announcements and information to be sent to them in
relation to the Acquisition should be sent to them in hard copy form, again by
writing to the address set out above or by calling the telephone number above.
If you are in any doubt about the contents of this announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or independent financial adviser duly authorised under the Financial Services
and Markets Act 2000 (as amended) if you are resident in the United Kingdom
or, if not, from another appropriately authorised independent financial
adviser.
Rounding
Certain figures included in this announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures that precede them.
Rule 2.9 Disclosure
In accordance with Rule 2.9 of the Code, HEIT confirms that as at the date of
this announcement, it has in issue and admitted to trading on the main market
of the London Stock Exchange 227,128,295 ordinary shares of £0.01 each
(excluding any shares held in treasury). Accordingly, the total number of
voting rights in HEIT is 227,128,295. The International Securities
Identification Number (ISIN) of the ordinary shares is GB00BLNNFY18.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET
ABUSE REGULATION (EU) NO 596/2014 (INCORPORATED INTO UK LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018 AS AMENDED BY VIRTUE OF THE MARKET ABUSE
(AMENDMENT) (EU EXIT) REGULATIONS 2019). UPON THE PUBLICATION OF THIS
ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INSIDE INFORMATION IS
NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
FOR IMMEDIATE RELEASE
25 March 2025
RECOMMENDED CASH ACQUISITION
of
Harmony Energy Income Trust Plc ("HEIT")
by
Drax BESS Holdco Limited ("Drax Bidco")
to be effected by means of a scheme of arrangement
under Part 26 of the Companies Act 2006
1 Introduction
The boards of directors of each of Drax Bidco and HEIT are pleased to announce
that they have reached agreement on the terms of a recommended cash
acquisition pursuant to which Drax Bidco, a wholly-owned subsidiary
undertaking of Drax, will acquire the entire issued ordinary share capital of
HEIT (the "Acquisition"). The Acquisition is intended to be effected by means
of a scheme of arrangement under Part 26 of the Companies Act.
2 The Acquisition
Under the terms of the Acquisition, which shall be subject to the Conditions
and further terms set out in Appendix I to this announcement and to be set out
in the Scheme Document, HEIT Shareholders will be entitled to receive:
for each Scheme Share: 88.0 pence in cash
The Consideration per Scheme Share values the entire issued share capital of
HEIT at approximately £199.9 million and represents a premium of
approximately:
o 5 per cent. to the Foresight possible offer of 84.0 pence per HEIT Share
on 17 March 2025 (being the date of the Foresight Rule 2.4 Announcement);
o 35 per cent. to the Closing Price of 65.2 pence per HEIT Share on 14 March
2025 (being the last Business Day prior to the date of the Foresight Rule 2.4
Announcement);
o 11 per cent. to the Closing Price of 79.2 pence per HEIT Share on 24 March
2025 (being the last Business Day prior to the date of this announcement);
o 84 per cent. to the Closing Price of 47.8 pence per HEIT Share on 29 May
2024 (being the last Business Day prior to the date of the announcement of
HEIT's ongoing asset sale process).
If, on or after the date of this announcement and on or prior to the Effective
Date, any dividend, distribution or other return of value is declared, made,
or paid, or becomes payable by HEIT, Drax Bidco reserves the right to reduce
the Consideration by an amount up to the amount of such dividend, distribution
or other return of value in which case the reference to the Consideration will
be deemed to be a reference to the Consideration as so reduced. In such
circumstances, HEIT Shareholders shall be entitled to retain any such
dividend, distribution, or other return of value declared, made, or paid.
It is expected that the Scheme Document containing further information about
the Acquisition and the Scheme, including a valuation report on HEIT's
portfolio in accordance with Rule 29 of the Code, and notices of the Court
Meeting and the General Meeting, will be published as soon as reasonably
practicable and, in any event, within 28 days of this announcement, unless
Drax Bidco and HEIT otherwise agree, and the Panel consents, to a later date.
It is expected that the Court Meeting and the General Meeting shall be held in
May 2025 and that, subject to the satisfaction or (where relevant) waiver of
the Conditions, the Scheme shall become Effective around the end of Q2 2025.
3 Background to and reasons for the Acquisition
Drax believes that the Acquisition represents a highly attractive opportunity,
one which is complementary to the Wider Drax Group's existing FlexGen
portfolio, allowing it to provide a full range of BESS capable system support
services, including short duration and fast response capability, as well as
increased access to wholesale and balancing markets. The Wider Drax Group's
strategy is to create value and growth in the short, medium and long-term, and
to meet the UK's objectives of energy security, affordability, and
decarbonisation, while ensuring the Acquisition is underpinned by strong cash
generation, a disciplined approach to capital allocation, and attractive
returns for Drax shareholders.
Drax believes that the retirement of older thermal generation assets and
increased reliance on intermittent renewables, as well as an increase in power
demand, will drive a growing need for dispatchable power and system support
services, creating long-term earnings opportunities for, and value from, the
Wider Drax Group's FlexGen portfolio. The objective of this portfolio is to
capture the value associated with increased volatility resulting from the
growth of non-dispatchable renewable generation. Drax considers that the BESS
assets are well placed to capture that value, as well as providing additional
technology specific ancillary services that the system operator needs.
HEIT, a publicly listed investment trust set up to acquire ready-to-build BESS
assets, represents a compelling opportunity to add operating BESS assets to
the Wider Drax Group's FlexGen portfolio, offering the following key benefits:
· ability to perform daily cycling to capture the spread between
overnight prices and peaks as well as benefit from market volatility events;
· provides access to additional ancillary services markets by
adding rapid and short duration response capability; and
· complements Drax's existing 24/7 trading capability operating
across wholesale, balancing and ancillary service markets.
Drax views HEIT as a highly attractive large scale UK BESS portfolio,
comprised entirely of two-hour fully operational, cash generative assets which
can operate standalone today and allow for the future potential in-sourcing of
trading and optimisation.
Drax expects that return on invested capital from the Acquisition will
significantly exceed the Wider Drax Group's target weighted average cost of
capital.
The Consideration will be funded from existing cash on the balance sheet and
does not impact Drax's ongoing £300 million share buyback programme announced
on 26 July 2024, nor its planned dividend. As part of the Acquisition, HEIT's
existing £130 million seven-year debt facility will be retained. The
Acquisition is not expected to have a material impact on Drax's leverage or
credit rating. Drax continues to assess opportunities for capital deployment
in line with its policy and strategy, including further capital returns to
shareholders.
4 Background to and reasons for the recommendation
Background
HEIT was launched in November 2021 to invest in BESS in Great Britain. HEIT,
by way of a fundraising and issuance of shares at IPO, acquired an initial
portfolio of five BESS development projects (the "Seed Portfolio") in
accordance with HEIT's investment objective and policy. HEIT sought to deliver
to HEIT Shareholders an 8 per cent. per annum quarterly dividend (based on the
IPO issue price of 100 pence and once the portfolio was fully operational) and
an unlevered Net Asset Value total return of 10 per cent. per annum over the
medium to long-term.
HEIT's Seed Portfolio was acquired from Harmony Energy and at the same time
HEIT entered into a pipeline agreement giving it exclusive rights to acquire
further BESS projects from Harmony Energy. The first such project (Bumpers,
198 MWh / 99 MW) was acquired by HEIT in August 2022. In October 2022, HEIT
raised an additional £15 million to allow it to exercise its rights under the
pipeline agreement and acquire three additional assets. The new projects
increased HEIT's portfolio to nine BESS projects with a total capacity of
c.1GWh / 500MW. One of these projects, Rye Common (99MW) was subsequently sold
(pre-construction) in September 2023. The balance of the portfolio was built
out on a staggered basis, with the first project commencing operations in
November 2022. Following completion of construction of the final project in
October 2024, HEIT's portfolio of fully operational assets consists of eight
2-hour duration BESS projects totalling 790.8 MWh / 395.4 MW.
Performance since IPO
Despite positive progress on the construction of HEIT's portfolio, a more
challenging environment for BESS assets emerged through 2023 which impacted
revenue performance. This volatile environment led to a 4.5 per cent. fall in
the NAV per HEIT Share as at 31 October 2023, driven predominantly by a
reduction in third party revenue assumptions. For the year ended 31 October
2023 ("FY 2023"), HEIT reported that actual revenues achieved had been below
independent forecasts and this variance in revenue predictability, coupled
with higher interest rates, negatively impacted the share price of HEIT.
BESS revenues for FY 2023 were markedly lower than revenue generated in the
same period in 2022. Whilst a reduction from the highs of 2022 was expected
and built into third party revenue forecasts, the scale and the speed of the
reduction exceeded market expectations. There were multiple drivers of this
reduction in revenue, both macro and sector-specific, including:
· Saturation of ancillary service markets. The high
rate of build-out of BESS in Great Britain led to saturation of ancillary
services and had driven clearing prices for such services to record low
levels. This was widely anticipated and HEIT positioned its 2-hour duration
portfolio specifically to protect against this event and take maximum
advantage of the inevitable shift by BESS towards "arbitrage" strategies:
wholesale market trading and the Balancing Mechanism administered by NESO
("BM").
· Reduction in wholesale power price volatility and
spreads. As a 2-hour duration portfolio, this is more relevant to HEIT than
ancillary services. Wholesale spreads narrowed in FY 2023 and FQ1 of FY 2024
primarily due to a reduction in natural gas prices. In addition, Great Britain
was importing a large volume of energy from Europe (via interconnectors) and
high consumer prices had encouraged a material reduction in consumer energy
usage and demand.
· Implementation issues with NESO Open Balancing
Platform ("OBP"). Another key factor in revenue weakness was NESO's continued
sporadic use of BESS in the BM. Despite a well-publicised policy and
comprehensive plan from NESO to increase BESS dispatch rates in the BM via
process and software enhancements over 2024 and 2025, the December 2023 launch
of the new "bulk dispatch" software was curtailed due to technical issues.
Since its re-launch on 8 January 2024, NESO was noted to only be using OBP
intermittently, with HEIT's portfolio having experienced some days of high BM
volume, and some of zero. BESS projects utilise algorithms and AI software
to execute revenue strategies, and so the inconsistent use of the OBP by NESO
not only limited BESS volumes in the BM, but also created uncertainty over how
much daily capacity BESS can dedicate to other strategies and services.
The factors listed above caused HEIT to announce the postponement (and
subsequent cancellation) of its first quarterly dividend for FY 2024. The HEIT
Board also announced that it had restructured HEIT's existing debt facilities
(to reflect that 70 per cent. of the portfolio's MW capacity was then
operational) in February 2024, and reviewed its dividend policy to be a
proportion of operational free cash flow.
The Company did experience an improvement in portfolio revenues during the
course of 2024, due to a threefold increase in captured BM volumes in the
spring versus the winter and as software and process enhancements at NESO
began to take effect. As wind and solar generation increased their
proportionate share of Great Britain's electricity "stack", wholesale power
spreads became wider and more volatile, thereby increasing arbitrage
opportunities for BESS. Ultimately, total net revenue generation for FY 2024
was £16.3 million (£58.2k/MW/Yr) based on a weighted average operational
capacity of 280.4 MW.
Post FY 2024, revenue per MW has remained strong, as expected in the winter
period. The first quarter of FY 2025 (ending 31 January 2025) saw average
revenue of £97.8k/MW (97 per cent. higher than the same period during the
previous financial year). As a result of higher operating capacity and
stronger market conditions, HEIT's revenue for FQ1 of FY 2025 was c.£9.7
million, equating to approximately 60 per cent. of the total revenue earned by
HEIT during FY 2024.
Current market backdrop
The HEIT Share price has traded at a material and persistent discount to NAV
since early 2023. The HEIT Board believes that this has been driven by a
number of factors, including:
· Challenging macroeconomic conditions, notably the
rapid rise in interest rates which has resulted in a higher cost of capital
for investors and persistent equity outflows from the UK which has resulted in
a general shift in market sentiment away from UK investment trusts. This has
resulted in the UK investment trust sector, as a whole, trading at a material
discount to net asset value. The HEIT Board notes that these pressures
persist, and the UK BESS investment trust sector (excluding HEIT) is currently
trading at an approximate 46 per cent. discount to published net asset value.
This discount to net asset value continues to restrict HEIT's ability to raise
further capital and thus prevents HEIT from taking advantage of its right of
first refusal over Harmony Energy's development pipeline and grow its asset
base.
· Volatility in revenues caused by the Ukraine
conflict and other geopolitical events, which led to HEIT cancelling its
dividend for FY 2024 in February 2024, as described above. Whilst the HEIT
Board is encouraged by the recent high revenue levels of HEIT's portfolio and
continues to believe in the strength of HEIT's asset base, the HEIT Board
expects there will continue to be an element of seasonality to HEIT's revenues
and there is no guarantee that these current revenue levels will persist.
Asset sale process
It was in this context, and in order to explore opportunities to maximise
value to HEIT Shareholders, that the HEIT Board engaged Jones Lang LaSalle in
May 2024 with a mandate to seek offers for some or all of the HEIT portfolio
(the "Asset Sale"). The aim of this process was to demonstrate to the market
the true value of the HEIT portfolio and the continuing disconnect with the
share price. At the time, HEIT Shares were trading at an approximately 50 per
cent. discount to the published adjusted Net Asset Value per HEIT Share.
This process attracted strong interest from multiple bidders and HEIT
progressed to a final stage of negotiations with Drax on an exclusive basis in
December 2024 in relation to a sale of the entire HEIT portfolio. Further
updates were made on 26 February 2025 and 11 March 2025 confirming that both
parties were continuing to progress towards conclusion of a definitive
agreement of the Asset Sale.
Offer from Drax and factors considered by the HEIT Board
It was against this backdrop of very substantial progress through the Asset
Sale process that HEIT received a proposal from Foresight to acquire 100 per
cent. of the issued share capital of HEIT. On 17 March 2025, HEIT and
Foresight announced that they had agreed the financial terms of a potential
offer by one or more funds managed by Foresight and its affiliates for the
entire issued share capital of HEIT at 84.0 pence per HEIT Share. This
announcement stated that the HEIT Board had indicated to Foresight that,
should a firm offer be made on the financial terms set out above, the HEIT
Board would be minded to recommend such an offer to HEIT Shareholders. HEIT
subsequently received a proposal from Drax to acquire 100 per cent. of the
issued share capital of HEIT at an increased price of 88.0 pence per HEIT
Share and, as set out in this announcement, the boards of directors of HEIT
and Drax Bidco have now reached agreement on the terms of a recommended cash
acquisition pursuant to which Drax shall acquire the entire issued ordinary
share capital of HEIT.
The HEIT Board believes that, having run a comprehensive process for the Asset
Sale involving a number of parties and now through the receipt of more than
one bid for HEIT's share capital, value to HEIT Shareholders will be maximised
through the terms of the Acquisition. Further, the HEIT Board believes that
the Acquisition will provide HEIT Shareholders with the opportunity to realise
the value of their holdings, in cash, at an attractive value which is in
excess of the reasonable medium-term prospects for HEIT on a standalone basis
as a listed company. In particular, the HEIT Board notes that HEIT has traded
at a sustained discount to NAV since the start of 2023, consistent with the
broader listed renewables investment trust sector and reflecting the
aforementioned factors and changing macroeconomic conditions. In the context
of ongoing market and macroeconomic volatility, and the valuation of
comparable listed renewables investment trusts, the HEIT Board considers that
there can be no certainty that the discount to NAV at which HEIT trades would
be reduced in the medium term, in the absence of this Acquisition.
The financial terms of the Acquisition represent:
· a 35 per cent. premium to the Closing Price of 65.2
pence per HEIT Share on 14 March 2025 (being the last Business Day prior to
the start of the offer period); and
· a 84 per cent. premium to the Closing Price of 47.8
pence per HEIT Share on 29 May 2024 (being the last Business Day prior to the
date of the announcement of HEIT's asset sale process).
Therefore, after careful consideration together with its financial adviser,
the HEIT Board has concluded that the Acquisition is in the best interests of
HEIT Shareholders and HEIT as a whole. Accordingly, the HEIT Directors intend
to recommend unanimously the Acquisition to HEIT Shareholders.
5 Recommendation
The HEIT Directors, who have been so advised by Panmure Liberum as to the
financial terms of the Acquisition, consider the terms of the Acquisition to
be fair and reasonable. In providing its advice to HEIT Directors, Panmure
Liberum has taken into account the commercial assessments of the HEIT
Directors. Panmure Liberum is providing independent financial advice to the
HEIT Directors for the purposes of Rule 3 of the Code.
Accordingly, for the reasons set out above, the HEIT Directors intend to
recommend unanimously that HEIT Shareholders vote in favour of the Scheme at
the Court Meeting and the resolutions to be proposed at the General Meeting
(or, in the event that the Acquisition is implemented by way of a Takeover
Offer, to accept or procure acceptance of the Takeover Offer) as the HEIT
Directors have irrevocably undertaken to do in respect of their own beneficial
holdings of 101,116 HEIT Shares representing, in aggregate, approximately 0.04
per cent. of the existing issued ordinary share capital of HEIT in issue on
the Latest Practicable Date.
6 Irrevocable undertakings
As noted above, Drax Bidco has received irrevocable undertakings from each of
the HEIT Directors to vote in favour of the Scheme at the Court Meeting and
the resolutions to be proposed at the General Meeting (or, in the event that
the Acquisition is implemented by way of a Takeover Offer, to accept or
procure acceptance of the Takeover Offer), in respect of a total of 101,116
HEIT Shares, representing approximately 0.04 per cent. of the existing issued
ordinary share capital of HEIT on the Latest Practicable Date.
Drax Bidco has also received irrevocable undertakings to vote in favour of the
Scheme at the Court Meeting and the resolutions to be proposed at the General
Meeting (or, in the event that the Acquisition is implemented by way of a
Takeover Offer, to accept or procure acceptance of the Takeover Offer) from
HEIT Shareholders in respect of a total of 44,448,634 HEIT Shares
representing, in aggregate, approximately 19.6 per cent. of HEIT's existing
issued ordinary share capital on the Latest Practicable Date.
Drax Bidco has therefore received irrevocable undertakings in respect of a
total of 44,549,750 HEIT Shares representing, in aggregate, approximately 19.6
per cent. of HEIT's existing issued ordinary share capital in issue on the
Latest Practicable Date.
7 Information on Drax Bidco and Drax
Drax is a renewable energy company engaged in renewable power generation, the
production of sustainable biomass and the sale of renewable electricity to
businesses.
Drax operates a generation portfolio of sustainable biomass, hydro-electric
and pumped storage hydro assets in England and Scotland and is developing
three open cycle gas turbine assets, two in England and one in Wales. Drax's
Energy Solutions business sells renewable electricity to industrial and
commercial customers in the UK. The Wider Drax Group also operates a biomass
pellet production business with 18 operational and development sites for a
combination of own-use and third-party sales, from existing and new markets,
including Sustainable Aviation Fuel (SAF), where Drax is developing a pipeline
of biomass sales opportunities in North America, Asia and Europe.
The Wider Drax Group employs over 3,200 people in the UK, US, Canada and
Japan. The Wider Drax Group had total revenue of £6,163 million in 2024 and
adjusted EBITDA of £1,064 million.
Drax Bidco was incorporated on 27 December 2024 and is a wholly-owned
subsidiary undertaking of Drax. It has not traded since its date of
incorporation, nor has it entered into any obligations other than in
connection with the Acquisition.
8 Information on HEIT
HEIT is a UK-based investment trust, investing in a diversified portfolio of
utility-scale energy storage and renewable energy generation assets in Great
Britain. HEIT primarily focuses on BESS, which play a crucial role in the
transition to a cleaner energy system. These systems store energy and release
it when needed, helping to balance supply and demand on the grid, and
facilitate the integration of renewable energy sources like wind and solar
power.
HEIT's portfolio consists of 100 per cent. operational BESS across eight
projects (790.8 MWh / 395.4 MW) in Great Britain.
For FY 2024, HEIT reported revenue of £16.3 million (£58.2k/MW/Yr) and a NAV
of £201.1 million (88.5 pence per HEIT Share), a reduction of 23.3 per cent.
(a decrease of 26.9 pence per HEIT Share) from the NAV reported as at 31
October 2023. The NAV total return over FY 2024 was reported to be 21.6 per
cent. NAV total return since IPO was reported to be negative 2.4 per cent.
9 Strategic plans, management, employees, pensions, research and
development and locations
Strategic plans
Drax Bidco recognises the breadth and quality of HEIT's portfolio of BESS
assets which will, upon Acquisition, form part of Drax's broader FlexGen
portfolio.
Drax Bidco intends to discuss future asset management and advisory services
with HEAL, the current provider of asset management services, as soon as
reasonably practicable. Trading and optimisation will initially continue to be
undertaken by the counterparties to the existing trading and optimisation
agreements. Drax Bidco intends to build out its trading and optimisation
capabilities, through either an internally built or third-party system, so as
to enable it to trade and optimise the BESS assets without the need for third
party optimisers.
Board composition and governance arrangements
Drax Bidco intends to delist HEIT immediately following the Effective Date.
Consequently, Drax Bidco will not require listed company governance structures
and accordingly, it is intended that each of the HEIT Directors will step down
from the board of directors of HEIT, and the directors of the HEIT Group
companies will step down from the boards of each of the HEIT Group companies,
upon the Effective Date.
Employees, management and pensions
As HEIT is an externally-managed investment company, HEIT does not have any
employees and therefore does not operate any pension schemes, nor does it have
any arrangements in place for any employee involvement in its capital.
Headquarters, fixed assets, research and development
HEIT has no fixed place of business, fixed assets (other than its BESS
assets), research and development function or headquarters.
Asset management arrangements
As set out above, Drax Bidco intends to discuss future asset management and
advisory services with HEAL, the current provider of asset management
services, as soon as reasonably practicable.
Trading facilities
It is intended that dealings in, and registration of transfers of, HEIT Shares
(other than the registration of the transfer of the Scheme Shares to Drax
Bidco pursuant to the Scheme) will be suspended shortly before the Effective
Date at a time to be set out in the Scheme Document. It is further intended
that applications will be made to the London Stock Exchange to cancel the
trading in the HEIT Shares on the main market, and to the FCA to cancel the
listing of the HEIT Shares on the Official List, in each case with effect from
or shortly following the Effective Date. Further details about the delisting
and cancellation of trading of the HEIT Shares can be found in paragraph 15 of
this announcement.
Post-offer undertakings
No statements in this paragraph 9 are "post-offer undertakings" for the
purposes of Rule 19.5 of the Code.
10 Dividends
If, on or after the date of this announcement and on or prior to the Effective
Date, any dividend, distribution, or other return of value is declared, made
or paid, or becomes payable by HEIT, the Consideration shall be reduced
accordingly. In such circumstances, HEIT Shareholders shall be entitled to
retain any such dividend, distribution, or other return of value declared,
made, or paid.
11 Financing of the Acquisition
The Consideration payable by Drax Bidco pursuant to the Acquisition will be
funded from the Wider Drax Group's existing cash resources. J.P. Morgan
Cazenove, in its capacity as financial adviser to Drax Bidco, is satisfied
that sufficient cash resources are available to Drax Bidco to satisfy in full
the Consideration payable by Drax Bidco to HEIT Shareholders pursuant to the
Acquisition.
12 Offer-related arrangements
Confidentiality Agreement
Drax Corporate and HEAL have entered into a mutual confidentiality agreement
dated 7 August 2024 pursuant to which each of Drax Corporate and HEAL have
undertaken, amongst other things, to: (i) keep confidential information
relating to HEIT's ongoing asset sale process and the other party and not to
disclose it any person other than an authorised recipient (unless disclosed
with prior written consent or required by law or regulation); and (ii) use the
confidential information for the sole purpose of discussing HEIT's ongoing
asset sale process.
13 Structure of and Conditions to the Acquisition
It is intended that the Acquisition will be effected by means of a
Court-approved scheme of arrangement between HEIT and HEIT Shareholders under
Part 26 of the Companies Act although Drax Bidco reserves the right to
implement the Acquisition by means of a Takeover Offer (subject to Panel
consent and in compliance with the Code).
A Scheme of Arrangement is a formal arrangement between HEIT and its
shareholders, which is governed by the Companies Act. The Scheme of
Arrangement must be approved both by the HEIT Shareholders and the Court.
If sanctioned, upon becoming Effective, the Scheme will bind all HEIT
Shareholders (regardless of whether or not they attended or voted at the Court
Meeting or the General Meeting (and if they attended and voted, in what way
they voted)). The purpose of the Scheme is to provide for Drax Bidco to become
the holder of the entire issued ordinary share capital of HEIT. This is to be
achieved by the transfer of the HEIT Shares to Drax Bidco, in consideration
for which the HEIT Shareholders shall receive the Consideration on the basis
set out in paragraph 2 of this announcement. The consideration payable under
the terms of the Acquisition will be despatched to HEIT Shareholders no later
than 14 days after the Effective Date.
The Acquisition shall be subject to the Conditions and further terms set out
below and in Appendix I to this announcement and the full terms and conditions
to be set out in the Scheme Document and shall only become Effective, if,
among other things, the following events occur on or before 11.59 p.m. on the
Long-stop Date:
(a) the approval of the Scheme by a majority in number of the HEIT
Shareholders who are present and vote, whether in person or by proxy, at the
Court Meeting and who represent 75 per cent. in value of the HEIT Shares voted
by those HEIT Shareholders;
(b) the resolutions required to approve and implement the Scheme being duly
passed by HEIT Shareholders representing the requisite majority or majorities
of votes cast at the General Meeting (or any adjournment thereof);
(c) regulatory approval from the Secretary of State pursuant to the NSI Act
is obtained or waived, as applicable;
(d) the approval of the Scheme by the Court (with or without modification
but subject to any modification being on terms acceptable to HEIT and Drax
Bidco); and
(e) the delivery of a copy of the Court Order to the Registrar of Companies.
The Scheme will lapse if:
· the Court Meeting and the General Meeting are not held by the
22nd day after the expected date of such meetings to be set out in the Scheme
Document in due course (or such later date as may be agreed between Drax Bidco
and HEIT);
· the Court Hearing is not held by the 22nd day after the expected
date of such hearing to be set out in the Scheme Document (or such later date
as may be agreed between Drax Bidco and HEIT); or
· the Scheme does not become Effective by no later than 11.59 p.m.
on the Long-stop Date,
provided, however, that the deadlines for the timing of the Court Meeting, the
General Meeting and the Court Hearing as set out above may be waived by Drax
Bidco, and the deadline for the Scheme to become Effective may be extended by
agreement between HEIT and Drax Bidco and with the consent of the Panel and
(where relevant) the Court.
Once the necessary approvals from HEIT Shareholders have been obtained and the
other Conditions have been satisfied or (where applicable) waived, the Scheme
must be sanctioned by the Court (with or without modification but with any
such modification being acceptable to HEIT and Drax Bidco). The Scheme will
become Effective upon delivery to the Registrar of Companies of a copy of the
Court Order.
Subject to satisfaction (or waiver, where applicable) of the Conditions, the
Scheme is expected to become Effective around the end of Q2 2025.
The Acquisition does not require the approval of the shareholders of Drax.
Upon the Scheme becoming Effective, it will be binding on all HEIT
Shareholders, irrespective of whether or not they attended or voted at the
Court Meeting or the General Meeting.
Further details of the Scheme, including an indicative timetable for its
implementation, will be set out in the Scheme Document which shall be
distributed to HEIT Shareholders (along with the Forms of Proxy for use in
connection with the Court Meeting and the General Meeting) in due course.
14 Disclosure of Interests in HEIT
Save in respect of the irrevocable undertakings referred to in paragraph 6
above, as at the close of business on the Latest Practicable Date neither Drax
Bidco, nor any of its directors, nor, so far as Drax Bidco is aware, any
person acting in concert (within the meaning of the Code) with it has neither:
(i) any interest in or right to subscribe for any relevant
securities of HEIT;
(ii) any short positions in respect of relevant HEIT Shares
(whether conditional or absolute and whether in the money or otherwise),
including any short position under a derivative, any agreement to sell or any
delivery obligation or right to require another person to purchase or take
delivery;
(iii) any Dealing Arrangement, in relation to HEIT Shares or in
relation to any securities convertible or exchangeable into HEIT Shares; or
(iv) borrowed or lent any relevant HEIT Shares (including, for
these purposes, any financial collateral arrangements of the kind referred to
in Note 4 on Rule 4.6 of the Code), save for any borrowed shares which had
been either on-lent or sold.
'Interests in securities' for these purposes arise, in summary, when a person
has long economic exposure, whether absolute or conditional, to changes in the
price of securities (and a person who only has a short position in securities
is not treated as interested in those securities). In particular, a person
shall be treated as having an 'interest' by virtue of the ownership, voting
rights or control of securities, or by virtue of any agreement to purchase,
option in respect of, or derivative referenced to, securities and 'relevant
securities of HEIT' are HEIT Shares or securities convertible or exchangeable
into HEIT Shares.
It has not been practicable for Drax Bidco to make enquiries of all of its
concert parties in advance of the release of this announcement. Therefore, all
relevant details in respect of Drax Bidco's concert parties shall be included
in the Opening Position Disclosure in accordance with Rule 8.1(a) and Note
2(a)(i) on Rule 8 of the Code.
15 Delisting of HEIT Shares
Prior to the Scheme becoming Effective, Drax Bidco will make an application to
the London Stock Exchange to cancel trading in the HEIT Shares on the main
market and to the FCA to cancel the listing of the HEIT Shares from the
Official List, in each case on or shortly after the Effective Date. The last
day of dealings in the HEIT Shares on the main market is expected to be the
Business Day immediately prior to the Court Hearing and no transfers will be
registered after 6.00 p.m. on that date.
On the Effective Date, HEIT will become a wholly-owned subsidiary of Drax
Bidco and share certificates in respect of HEIT Shares will cease to be valid
and should be destroyed. In addition, entitlements to HEIT Shares held within
the CREST system will be cancelled on the Effective Date.
Upon the Scheme becoming Effective, Drax Bidco (and/or its nominee(s)) will
acquire the Scheme Shares fully paid and free from all liens, equitable
interests, charges, encumbrances and other third party rights of any nature
whatsoever and together with all rights attaching to them including the right
to receive and retain all dividends and distributions (if any) declared after
the Effective Date.
16 General
Drax Bidco reserves the right to elect (with the consent of the Panel and in
compliance with the Code) to implement the Acquisition by way of a Takeover
Offer for the HEIT Shares as an alternative to the Scheme. In such event, the
Takeover Offer shall be implemented on the same terms, so far as applicable,
as those which would apply to the Scheme, subject to appropriate amendments,
including (without limitation) an acceptance condition set at a level
permitted by the Panel.
The Acquisition shall be made subject to the Conditions and further terms set
out in Appendix I to this announcement and to be set out in the Scheme
Document. For the purposes of Rule 29.1(d) of the Takeover Code, a valuation
of HEIT's portfolio will be included in the Scheme Document (or, if
applicable, the offer document). The bases and sources of certain financial
information contained in this announcement are set out in Appendix II to this
announcement. A summary of the irrevocable undertakings given in relation to
the Acquisition is contained in Appendix III to this announcement. Certain
terms used in this announcement are defined in Appendix IV to this
announcement.
The Scheme Document, containing further information about the Acquisition and
notices of the Court Meeting and the General Meeting will be distributed to
HEIT Shareholders (along with the Forms of Proxy for use in connection with
the Court Meeting and the General Meeting) in due course. The Scheme Document
and Forms of Proxy shall be made available to all HEIT Shareholders at no
charge to them.
J.P. Morgan Cazenove, Panmure Liberum and Stifel have each given and not
withdrawn their consent to the publication of this announcement with the
inclusion herein of the references to their names in the form and context in
which they appear.
17 Documents available on website
Copies of the following documents will be made available on Drax's and HEIT's
websites at www.drax.com/investors/offer and
www.heitp.co.uk/investors/proposed-offer-from-drax respectively until the
Effective Date:
· this announcement;
· the Confidentiality Agreement referred to in
paragraph 12 above;
· the irrevocable undertakings referred to in
paragraph 6 above and summarised in Appendix III to this announcement; and
· the consent letters from J.P. Morgan Cazenove,
Panmure Liberum and Stifel referred to in paragraph 16 above.
The contents of the websites referred to in this announcement and any websites
accessible from hyperlinks on these websites are not incorporated into and do
not form part of this announcement.
Enquiries:
Drax and Drax Bidco
Enquiries:
Drax Investor Relations:
Mark Strafford
mark.strafford@drax.com
+44 (0) 7730 763 949
Chris Simpson
Chris.Simpson@drax.com
+44 (0) 7923 257 815
Media:
Drax External Communications:
Chris Mostyn
Chris.Mostyn@drax.com
+44 (0) 7743 963 483
J.P. Morgan Cazenove (Financial Adviser and Corporate Broker to Drax and Drax Tel: +44 (0)20 3493 8000
Bidco)
Robert Constant
James Robinson
Alia Malik
Rupert Budge
FTI Consulting (PR Adviser to Drax and Drax Bidco)
Kate Brader +44 (0) 79 2918 1850
Senior Managing Director / Partner +44 (0)20 3727 1539
FTI Consulting
kate.brader@fticonsulting.com
HEIT Via Panmure Liberum Limited
Norman Crighton, Chairman
Panmure Liberum (Financial Adviser, Rule 3 Adviser and Joint Broker to HEIT) Tel: +44 (0)20 3100 2222
Corporate Finance:
Chris Clarke
Darren Vickers
Will King
M&A:
Tim Medak
Stifel (Joint Broker to HEIT) Tel: +44 (0)20 7710 7600
Mark Young
Edward Gibson-Watt
Rajpal Padam
Madison Kominski
Camarco (PR Adviser to HEIT) Tel: +44 (0)20 3757 4980
Eddie Livingstone-Learmonth
Andrew Turner
Pinsent Masons LLP is acting as legal adviser to Drax Bidco and Drax, and
Gowling WLG (UK) LLP is acting as legal adviser to HEIT, in connection with
the Acquisition.
Important notices
J.P. Morgan Securities plc, which conducts its UK investment banking business
as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised in the United
Kingdom by the PRA and regulated in the United Kingdom by the PRA and the FCA.
J.P. Morgan Cazenove is acting as financial adviser exclusively for Drax Bidco
and Drax and no one else in connection with the matters set out in this
announcement and will not regard any other person as its client in relation to
the matters in this announcement and will not be responsible to anyone other
than Drax Bidco and Drax for providing the protections afforded to clients of
J.P. Morgan Cazenove or its affiliates, nor for providing advice in relation
to any matter referred to herein.
Panmure Liberum Limited ("Panmure Liberum"), which is authorised and regulated
by the Financial Conduct Authority in the United Kingdom, is acting
exclusively as financial adviser, Rule 3 adviser and joint broker to HEIT and
no one else in connection with the Acquisition and the matters and
arrangements set out in this announcement. Panmure Liberum will not regard any
other person as its client in relation to the Acquisition or any other matter
or arrangement set out in this announcement and will not be responsible to
anyone other than HEIT for providing the protections afforded to clients of
Panmure Liberum, nor for providing advice in relation to the Acquisition or
any other matter or arrangement referred to in this announcement. Neither
Panmure Liberum nor any of its affiliates (nor their respective directors,
officers, employees or agents) owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, consequential, whether
in contract, in tort, in delict, under statute or otherwise) to any person who
is not a client of Panmure Liberum in connection with the Acquisition, this
announcement, any statement contained herein or otherwise. No representation
or warranty, express or implied, is made by Panmure Liberum as to the contents
of this announcement.
Stifel Nicolaus Europe Limited ("Stifel"), which is authorised and regulated
by the Financial Conduct Authority in the United Kingdom, is acting
exclusively as joint broker to HEIT and no one else in connection with the
Acquisition and the matters and arrangements set out in this announcement.
Stifel will not regard any other person as its client in relation to the
Acquisition or any other matter or arrangement set out in this announcement
and will not be responsible to anyone other than HEIT for providing the
protections afforded to clients of Stifel, nor for providing advice in
relation to the Acquisition or any other matter or arrangement referred to in
this announcement. Neither Stifel nor any of its affiliates (nor their
respective directors, officers, employees or agents) owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect,
consequential, whether in contract, in tort, in delict, under statute or
otherwise) to any person who is not a client of Stifel in connection with the
Acquisition, this announcement, any statement contained herein or otherwise.
No representation or warranty, express or implied, is made by Stifel as to the
contents of this announcement.
Further information
This announcement is for information purposes only and is not intended to and
does not constitute, or form part of, an offer to sell or an invitation to
purchase any securities or the solicitation of an offer to buy, otherwise
acquire, subscribe for, sell or otherwise dispose of any securities, pursuant
to the Acquisition or otherwise, nor shall there be any purchase, sale,
issuance or exchange of securities or such solicitation in any jurisdiction in
which such offer, invitation, solicitation, purchase, sale, issuance or
exchange is unlawful.
The Acquisition shall be made solely by means of the Scheme Document (or, if
the Acquisition is implemented by way of a Takeover Offer, any document by
which the Takeover Offer is made) which, together with the Forms of Proxy (or
forms of acceptance, if applicable), shall contain the full terms and
conditions of the Acquisition, including details of how to vote in respect of
the resolutions proposed in connection with the Acquisition. Any vote,
approval, decision in respect of, or other response to, the Acquisition should
be made only on the basis of the information contained in the Scheme Document
(or if the Acquisition is to be implemented by way of a Takeover Offer, the
offer document).
The statements contained in this announcement are made as at the date of this
announcement, unless some other time is specified in relation to them, and the
release of this announcement shall not give rise to any implication that there
has been no change in the facts set out in this announcement since such date.
This announcement has been prepared for the purpose of complying with English
law, the Code, the Market Abuse Regulation and the Disclosure Guidance and
Transparency Rules 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 England and Wales. The
Acquisition will be subject to the applicable requirements of the Code, the
Panel, the London Stock Exchange and the Financial Conduct Authority.
HEIT will prepare the Scheme Document to be distributed to HEIT Shareholders.
The Acquisition will be implemented solely pursuant to the terms of the Scheme
Document (or, in the event that the Acquisition is to be implemented by means
of a Takeover Offer, the Offer Document), which, together with the Forms of
Proxy, will contain the full terms and conditions of the Acquisition,
including details of how to vote in respect of the Acquisition. HEIT
Shareholders are advised to read the Scheme Document (including the related
Forms of Proxy) (and/or, in the event that the Acquisition is to be
implemented by way of a Takeover Offer, the Offer Document) carefully once
these become available because they will contain important information in
relation to the Acquisition. Any vote in respect of resolutions to be proposed
at the General Meeting, and any decision in respect of the Scheme or other
response in relation to the Acquisition by HEIT Shareholders should be made
only on the basis of the information contained in the Scheme Document (and/or,
in the event that the Acquisition is to be implemented by way of a Takeover
Offer, the Offer Document).
This announcement contains inside information in relation to each of HEIT and
Drax for the purposes of Article 7 of the Market Abuse Regulation. The person
responsible for making this announcement on behalf of HEIT is Susan Fadil of
the Company Secretary, JTC (UK) Limited and the person responsible for making
this announcement on behalf of Drax is Brett Gladden, Company Secretary.
This announcement does not constitute a prospectus or prospectus exempted
document.
Drax Bidco reserves the right to elect (with the consent of the Panel) to
implement the Acquisition by way of a Takeover Offer as an alternative to the
Scheme. In such event, the Takeover Offer will be implemented on substantially
the same terms, so far as applicable, as those which would apply to the
Scheme, subject to appropriate amendments to reflect the change in structure
by which the Acquisition is to be implemented and compliance with all
applicable laws.
Overseas shareholders
The release, publication or distribution of this announcement in or into
certain jurisdictions other than the United Kingdom may be restricted by the
laws and/or regulations of those jurisdictions. Persons into whose possession
this announcement comes who are not resident in the United Kingdom or who are
subject to the laws and/or regulations of any jurisdiction other than the
United Kingdom should inform themselves of, and observe, any such applicable
laws and/or regulations in their jurisdiction. In particular, the ability of
persons who are not resident in the United Kingdom to vote their HEIT Shares
with respect to the Scheme at the Court Meeting or the resolution(s) at the
General Meeting, or to appoint another person as proxy to vote at the Court
Meeting or the General Meeting on their behalf, may be affected by the laws of
the relevant jurisdiction in which they are located. Further details in
relation to Overseas Shareholders will be contained in the Scheme Document.
Any failure to comply with any such restrictions may constitute a violation of
the securities laws of any such jurisdiction. To the fullest extent permitted
by applicable law, the companies and persons involved in the Acquisition
disclaim any responsibility or liability for the violation of such
restrictions by any person.
Unless otherwise determined by Drax Bidco or required by the Code, and
permitted by applicable law and regulation, the Acquisition shall not be made
available, directly or indirectly, in, into or from a Restricted Jurisdiction
where to do so would violate the laws in that jurisdiction and no person may
vote in favour of the Acquisition by any such use, means, instrumentality or
form within a Restricted Jurisdiction or any other jurisdiction if to do so
would constitute a violation of the laws of 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 where to do so
would violate the laws in that jurisdiction. If the Acquisition is implemented
by a Takeover Offer (unless otherwise permitted by applicable law or
regulation), the Takeover Offer may not be made, directly or indirectly, in or
into or by use of the mails or any other means or instrumentality (including,
without limitation, facsimile, email or other electronic transmission, telex
or telephone) of interstate or foreign commerce of, or any facility of a
national state or other securities exchange, of any Restricted Jurisdiction
and the Takeover Offer will not be capable of acceptance by any such use,
means, instrumentality or facilities or from or within any Restricted
Jurisdiction.
The availability of the Acquisition to HEIT Shareholders who are not resident
in the United Kingdom 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.
Additional Information for HEIT Shareholders Resident in the United States
HEIT Shareholders resident in the United States should note that the
Acquisition relates to the shares of an English company and is being made by
means of a scheme of arrangement provided for under, and governed by, the law
of England and Wales. A transaction effected by means of a scheme of
arrangement is not subject to the tender offer rules or the proxy solicitation
rules under the US Securities Exchange Act of 1934, as amended (the "US
Exchange Act"). Accordingly, the Acquisition is subject to the disclosure
requirements and practices applicable in the United Kingdom to schemes of
arrangement which differ from the disclosure requirements of United States
tender offer and proxy solicitation rules. If, in the future, Drax Bidco
exercises the right to implement the Acquisition by way of a Takeover Offer
and determines to extend the Takeover Offer into the United States, the
Acquisition will be made in compliance with applicable United States laws and
regulations, including Section 14(e) of the US Exchange Act and Regulation 14E
thereunder. Any such Takeover Offer would be made in the United States by Drax
Bidco and no one else.
Financial information included in this announcement and the Scheme Document
has been or will have been prepared in accordance with accounting standards
under UK-adopted international accounting standards and in accordance with
International Financial Reporting Standards ("IFRS") and thus may not be
comparable to financial information of US companies or companies whose
financial statements are prepared in accordance with generally accepted
accounting principles in the United States.
The receipt of cash pursuant to the Acquisition by a US holder of HEIT Shares
as consideration for the transfer of its Scheme Shares pursuant to the Scheme
may be a taxable transaction for US federal income tax purposes and under
applicable US state and local, as well as foreign and other, tax laws. Each
HEIT Shareholder is therefore urged to consult with independent legal, tax and
financial advisers in connection with making a decision regarding the
Acquisition.
Drax Bidco and HEIT are each organised and located in a non-US jurisdiction
and some or all of their officers and directors may be residents of a non-US
jurisdiction. It may therefore be difficult for holders of HEIT Shares located
in the United States to enforce their rights and any claim arising out of US
securities law. It may not be possible to sue Drax Bidco and HEIT (or their
officers and directors) in a non-US court for violations of US securities
laws. Furthermore, it may be difficult to compel Drax Bidco and HEIT and their
respective affiliates to subject themselves to the jurisdiction or judgment of
a US court.
In accordance with normal UK practice and to the extent permitted under Rule
14e-5(b) of the US Exchange Act, Drax Bidco, certain affiliated companies and
their nominees or brokers (acting as agents), may from time to time make
certain purchases of, or arrangements to purchase, HEIT Shares outside of the
United States, other than pursuant to the Acquisition, until the Effective
Date, lapses or is otherwise withdrawn. If such purchases or arrangements to
purchase were to be made they would occur either in the open market at
prevailing prices or in private transactions at negotiated prices and comply
with applicable law, including English law, the Code and the US Exchange Act.
Any information about such purchases will be disclosed as required in the UK,
will be reported to the Regulatory News Service of the London Stock Exchange
and will be available on the London Stock Exchange website at
https://www.londonstockexchange.com/.
The receipt of consideration by a US holder for the transfer of its HEIT
Shares pursuant to the Acquisition may have tax consequences in the US and
such consequences, if any, are not described herein. US holders of HEIT Shares
are urged to consult their independent professional adviser immediately
regarding the legal, tax and financial consequences of the Acquisition
applicable to them.
This announcement does not constitute or form a part of any offer to sell or
issue, or any solicitation of any offer to purchase, subscribe for or
otherwise acquire, any securities in the United States.
Neither the US Securities and Exchange Commission nor any securities
commission of any state of the United States has approved or disapproved the
Acquisition, passed upon the fairness of the Acquisition, or passed upon the
adequacy or accuracy of this announcement. Any representation to the contrary
is a criminal offence in the United States.
Forward looking statements
The information provided in this announcement contains certain forward-looking
statements and information (collectively, "forward-looking statements") within
the meaning of applicable securities laws. Such forward-looking statements
include, without limitation, forecasts, estimates, expectations and objectives
for future operations that are subject to assumptions, risks and
uncertainties, many of which are beyond the control of Drax Bidco or HEIT.
Forward-looking statements are predictive in nature, depend upon or refer to
future events or conditions, or include words such as "expect", "plan",
"anticipate", "believe", "intend", "maintain", "continue to", "pursue",
"design", "result in", "sustain" "estimate", "potential", "growth",
"near-term", "long-term", "forecast", "contingent" and similar expressions, or
are events or conditions that "will", "would", "may", "could" or "should"
occur or be achieved. The forward-looking statements contained in this
announcement speak only as of the date hereof and are expressly qualified by
this cautionary statement.
Forward-looking statements are based upon, among other things, factors,
expectations and assumptions that Drax Bidco and HEIT have made as at the date
of this announcement regarding, among other things: the satisfaction of the
conditions to closing of the Acquisition in a timely manner, if at all,
including the receipt of all necessary approvals; and that the Acquisition
will comply with all applicable requirements of the Code, the Panel, the
London Stock Exchange and the Financial Conduct Authority.
Undue reliance should not be placed on the forward-looking statements because
no assurance can be given that they will prove to be correct. Since
forward-looking statements address future events and conditions, by their very
nature they involve inherent risks and uncertainties. These risks include, but
are not limited to: the completion and timing of the Acquisition; the ability
of Drax Bidco and HEIT to receive, in a timely manner, the necessary
regulatory, Court, shareholder, stock exchange and other third-party approvals
and to satisfy the other conditions to closing of the Acquisition; the ability
of the parties to complete the Acquisition on the terms contemplated by Drax
Bidco and HEIT or at all; consequences of not completing the Acquisition,
including the volatility of the share prices of Drax and HEIT, negative
reactions from the investment community, and the required payment of certain
costs related to the termination of the Acquisition; and the focus of
management's time and attention on the Acquisition and other disruptions
arising from the Acquisition.
Except as may be required by applicable securities laws, neither Drax Bidco
nor HEIT assume any obligation or intent to update publicly or revise any
forward-looking statements made herein, whether as a result of new
information, future events or otherwise.
No profit forecasts, profit estimates or quantified financial benefit
statement
No statement in this announcement is intended as a profit forecast, profit
estimate or quantified financial benefit statement for any period and no
statement in this announcement should be interpreted to mean that earnings or
earnings per share for Drax or HEIT, as appropriate, for the current or future
financial years would necessarily match or exceed the historical published
earnings or earnings per share for Drax or HEIT, as appropriate.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in 1 per cent. or
more of any class of relevant securities of an offeree company or of any
securities exchange offeror (being any offeror other than an offeror in
respect of which it has been announced that its offer is, or is likely to be,
solely in cash) must make an Opening Position Disclosure following the
commencement of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified. An Opening Position
Disclosure must contain details of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of (i) the
offeree company and (ii) any securities exchange offeror(s). An Opening
Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no
later than 3.30 p.m. (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later than 3.30
p.m. (London time) on the 10th business day following the announcement in
which any securities exchange offeror is first identified. Relevant persons
who deal in the relevant securities of the offeree company or of a securities
exchange offeror prior to the deadline for making an Opening Position
Disclosure must instead make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1
per cent. or more of any class of relevant securities of the offeree company
or of any securities exchange offeror must make a Dealing Disclosure if the
person deals in any relevant securities of the offeree company or of any
securities exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions in, and
rights to subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror(s), save to the extent that
these details have previously been disclosed under Rule 8. A Dealing
Disclosure by a person to whom Rule 8.3(b) applies must be made by no later
than 3.30 p.m. (London time) on the business day following the date of the
relevant dealing.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire or control an interest in relevant
securities of an offeree company or a securities exchange offeror, they shall
be deemed to be a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree company and by
any offeror and Dealing Disclosures must also be made by the offeree company,
by any offeror and by any persons acting in concert with any of them (see
Rules 8.1, 8.2 and 8.4).
Details of the offeree and offeror companies in respect of whose relevant
securities Opening Position Disclosures and Dealing Disclosures must be made
can be found in the Disclosure Table on the Panel's website at
http://www.thetakeoverpanel.org.uk, including details of the number of
relevant securities in issue, when the offer period commenced and when any
offeror was first identified. You should contact the Panel's Market
Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether
you are required to make an Opening Position Disclosure or a Dealing
Disclosure.
Electronic communications
Please be aware that addresses, electronic addresses and certain information
provided by HEIT Shareholders, persons with information rights and other
relevant persons for the receipt of communications from HEIT may be provided
to Drax Bidco during the offer period as requested under Section 4 of Appendix
4 of the Code to comply with Rule 2.11(c) of the Code.
Publication on website and availability of hard copies
A copy of this announcement will be made available, subject to certain
restrictions relating to persons resident in Restricted Jurisdictions, on
Drax's and HEIT's websites at www.drax.com/investors/offer and
www.heitp.co.uk/investors/proposed-offer-from-drax respectively by no later
than 12 noon (London time) on 26 March 2025. For the avoidance of doubt, the
contents of these websites are not incorporated into and do not form part of
this announcement.
HEIT Shareholders and persons with information rights may request a hard copy
of this announcement by contacting HEIT's registrar, Computershare Investor
Services PLC, by writing to them at The Pavilions, Bridgwater Road, Bristol
BS99 6ZZ or by calling them on +44 (0)370 703 6003 during business hours (9.30
a.m. to 5.30 p.m. (London time) Monday to Friday excluding public holidays in
England and Wales). Calls are charged at the standard geographical rate and
will vary by provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Please note that Computershare cannot provide
any financial, legal or tax advice. Calls may be recorded and monitored for
security and training purposes.
HEIT Shareholders and persons with information rights may also request that
all future documents, announcements and information to be sent to them in
relation to the Acquisition should be sent to them in hard copy form, again by
writing to the address set out above or by calling the telephone number above.
If you are in any doubt about the contents of this announcement or the action
you should take, you are recommended to seek your own independent financial
advice immediately from your stockbroker, bank manager, solicitor, accountant
or independent financial adviser duly authorised under the Financial Services
and Markets Act 2000 (as amended) if you are resident in the United Kingdom
or, if not, from another appropriately authorised independent financial
adviser.
Rounding
Certain figures included in this announcement have been subjected to rounding
adjustments. Accordingly, figures shown for the same category presented in
different tables may vary slightly and figures shown as totals in certain
tables may not be an arithmetic aggregation of the figures that precede them.
Rule 2.9 Disclosure
In accordance with Rule 2.9 of the Code, HEIT confirms that as at the date of
this announcement, it has in issue and admitted to trading on the main market
of the London Stock Exchange 227,128,295 ordinary shares of £0.01 each
(excluding any shares held in treasury). Accordingly, the total number of
voting rights in HEIT is 227,128,295. The International Securities
Identification Number (ISIN) of the ordinary shares is GB00BLNNFY18.
APPENDIX I
CONDITIONS AND FURTHER TERMS OF THE ACQUISITION
Part A: Conditions to the Scheme and the Acquisition
1 The Acquisition is conditional upon the Scheme becoming
unconditional and effective, subject to the Code, by no later than 11.59 p.m.
on the Long-stop Date or such later date (if any) as Drax Bidco and HEIT may,
with the consent of the Panel, agree and, if required, the Court may allow.
2 The Scheme shall be subject to the following conditions:
2.1
(i) its approval by a majority in number of the HEIT
Shareholders who are present and vote (and who are entitled to vote), whether
in person or by proxy, at the Court Meeting and who represent 75 per cent. or
more in value of the HEIT Shares voted by those HEIT Shareholders; and
(ii) such Court Meeting being held on or before the 22nd day
after the expected date of the Court Meeting to be set out in the Scheme
Document in due course (or such later date as may be agreed by Drax Bidco and
HEIT with the consent of the Panel and, if required, the Court may allow);
2.2
(i) the resolutions required to implement the Scheme being
duly passed by HEIT Shareholders representing 75 per cent. or more of votes
cast at the General Meeting; and
(ii) such General Meeting being held on or before the 22nd
day after the expected date of the General Meeting to be set out in the Scheme
Document in due course (or such later date as may be agreed by Drax Bidco and
HEIT with the consent of the Panel and, if required, the Court may allow);
2.3
(i) the sanction of the Scheme by the Court (with or
without modification but subject to any modification being on terms acceptable
to HEIT and Drax Bidco) and the delivery of a copy of the Court Order to the
Registrar of Companies; and
(ii) the Court Hearing being held on or before the 22nd day
after the expected date of the Court Hearing to be set out in either (X) the
Scheme Document in due course (or such later date as may be agreed by Drax
Bidco and HEIT with the consent of the Panel and, if required, the Court may
allow); or (Y) in the event that such expected date remains unknown at the
time of publication of the Scheme Document and the Scheme Document identifies
any date as indicative only, in any update announcement issued through a
Regulatory Information Service pursuant to paragraph 6(a) of Appendix 7 of the
Code (or such later date (if any) as may be agreed by Drax Bidco and HEIT,
with the consent of the Panel and (if required) that the Court may allow);
3 In addition, subject as stated in Part B below and to the
requirements of the Panel, the Acquisition shall be conditional upon the
following Conditions and, accordingly, the Court Order shall not be delivered
to the Registrar of Companies unless such Conditions (as amended, if
appropriate) have been satisfied or, where relevant, waived;
Regulatory and Antitrust
4 In the event that Drax Bidco is satisfied that the Acquisition
must be notified to, and approved by, the Secretary of State under the NSI Act
before it can be completed, either:
4.1 Drax Bidco having notified the Acquisition to the Secretary of
State in accordance with the NSI Act, and the Secretary of State subsequently
notifying Drax Bidco (before the expiry of the relevant assessment period
within which the Secretary of State may give a call-in notice under the NSI
Act) that no further action will be taken in relation to the Acquisition; or
4.2 in the event that a call-in notice is given in relation to the
Acquisition, the Secretary of State either:
4.2.1 giving a final notification confirming that no further action
will be taken in relation to Acquisition under the NSI Act; or
4.2.2 making a final order permitting the Acquisition to proceed
subject only to such remedies or requirements that are in all respects
reasonably acceptable to Drax Bidco, and such order not being revoked or
varied in a manner that is not reasonably satisfactory to Drago Bidco before
the Effective Date.
Notifications, waiting periods and Authorisations
5
(a) other than in relation to the matters referred to in
Condition 4, all material notifications, filings or applications which are
reasonably deemed necessary or appropriate by Drax Bidco having been made in
connection with the Acquisition and all necessary waiting periods (including
any extensions thereof) under any applicable legislation or regulation of any
jurisdiction having expired, lapsed or been terminated (as appropriate) and
all material statutory and regulatory obligations in any jurisdiction having
been complied with in each case in respect of the Acquisition and all
Authorisations reasonably deemed necessary or appropriate by Drax Bidco in any
jurisdiction for or in respect of the Acquisition and, except pursuant to
Chapter 3 of Part 28 of the Companies Act, the acquisition or the proposed
acquisition of any shares or other securities in, or control or management of,
HEIT or any other member of the Wider HEIT Group by any member of the Wider
Drax Group having been obtained in terms and in a form reasonably satisfactory
to Drax Bidco from all appropriate Third Parties or (without prejudice to the
generality of the foregoing) from any person or bodies with whom any member of
the Wider HEIT Group or the Wider Drax Group has entered into contractual
arrangements and all such Authorisations reasonably deemed necessary or
appropriate to carry on the business of any member of the Wider HEIT Group in
any jurisdiction which are material in the context of the Wider HEIT Group
taken as a whole or in the context of the Acquisition having been obtained and
all such Authorisations remaining in full force and effect at the time at
which the Acquisition becomes otherwise unconditional and there being no
notice or intimation of an intention to revoke, suspend, restrict, modify or
not to renew such Authorisations;
(b) other than in relation to the matters referred to in Condition
4, no antitrust regulator or Third Party having given notice of a decision to
take, institute, implement or threaten any action, proceeding, suit,
investigation, enquiry or reference (and in each case, not having withdrawn
the same), or having required any action to be taken or otherwise having done
anything, or having enacted, made or proposed any statute, regulation,
decision, order or change to published practice (and in each case, not having
withdrawn the same) and there not continuing to be outstanding any statute,
regulation, decision or order which would or might reasonably be expected to:
(i) require, prevent or delay the divestiture or alter the
terms envisaged for such divestiture by any member of the Wider Drax Group or
by any member of the Wider HEIT Group of all or any part of its businesses,
assets or property or impose any limitation on the ability of all or any of
them to conduct their businesses (or any part thereof) or to own, control or
manage any of their assets or properties (or any part thereof) which, in any
such case, is material in the context of the Wider Drax Group or the Wider
HEIT Group in either case taken as whole or in the context of the Acquisition;
(ii) except pursuant to Chapter 3 of Part 28 of the Companies
Act, require any member of the Wider Drax Group or the Wider HEIT Group to
acquire or offer to acquire any shares, other securities (or the equivalent)
or interest in any member of the Wider HEIT Group or any asset owned by any
Third Party (other than Scheme Shares in the implementation of the
Acquisition);
(iii) impose any limitation on, or result in a delay in, the
ability of any member of the Wider Drax Group directly or indirectly to
acquire, hold or to exercise effectively all or any rights of ownership in
respect of shares or other securities in HEIT or on the ability of any member
of the Wider HEIT Group or any member of the Wider Drax Group directly or
indirectly to hold or exercise effectively all or any rights of ownership in
respect of shares or other securities (or the equivalent) in, or to exercise
voting or management control over, any member of the Wider HEIT Group to the
extent which, in any such case, is material in the context of the Wider Drax
Group or the Wider HEIT Group in either case taken as a whole or in the
context of the Acquisition;
(iv) otherwise adversely affect any or all of the business,
assets, profits or prospects of any member of the Wider HEIT Group or any
member of the Wider Drax Group;
(v) result in any member of the Wider HEIT Group or any member
of the Wider Drax Group ceasing to be able to carry on business under any name
under which it presently carries on business;
(vi) make the Acquisition, its implementation or the acquisition
or proposed acquisition of any shares or other securities in, or control or
management of, HEIT by any member of the Wider Drax Group void, unenforceable
and/or illegal under the laws of any relevant jurisdiction, or otherwise,
directly or indirectly prevent or prohibit, restrict, restrain, or delay or
otherwise interfere with the implementation of, or impose additional
conditions or obligations with respect to, or otherwise challenge, impede,
interfere or require amendment of the Acquisition or the acquisition or
proposed acquisition of any shares or other securities in, or control or
management of, HEIT by any member of the Wider Drax Group to the extent which,
in any such case, is material in the context of the Wider Drax Group or the
Wider HEIT Group in either case taken as a whole or in the context of the
Acquisition;
(vii) require, prevent or materially delay a divestiture by any
member of the Wider Drax Group of any shares or other securities (or the
equivalent) in any member of the Wider HEIT Group or any member of the Wider
Drax Group; or
(viii) impose any limitation on the ability of any member of the Wider
Drax Group or any member of the Wider HEIT Group to conduct, integrate or
co-ordinate all or any part of its business with all or any part of the
business of any other member of the Wider Drax Group and/or the Wider HEIT
Group,
and all applicable waiting and other time periods (including any extensions
thereof) during which any such antitrust regulator or Third Party could decide
to take, institute, implement or threaten any such action, proceeding, suit,
investigation, enquiry or reference or take any other step under the laws of
any jurisdiction in respect of the Acquisition or the acquisition or proposed
acquisition of any HEIT Shares or otherwise intervene having expired, lapsed
or been terminated;
Certain matters arising as a result of any arrangement, agreement, etc.
(c) except as Disclosed, there being no provision of any
arrangement, agreement, lease, licence, franchise, permit or other instrument
to which any member of the Wider HEIT Group is a party or by or to which any
such member or any of its assets is or may be bound, entitled or be subject or
any event or circumstance which, as a consequence of the Acquisition or the
acquisition or the proposed acquisition by any member of the Wider Drax Group
of any shares or other securities (or the equivalent) in HEIT or because of a
change in the control or management of any member of the Wider HEIT Group or
otherwise, could or might reasonably be expected to result in any of the
following, in any case to an extent which is or would be material in the
context of the Wider Drax Group or the Wider HEIT Group in either case taken
as a whole or in the context of the Acquisition:
(i) any monies borrowed by, or any other indebtedness, actual
or contingent, of, or any grant available to, any member of the Wider HEIT
Group being or becoming repayable, or capable of being declared repayable,
immediately or prior to its or their stated maturity date or repayment date,
or the ability of any such member to borrow monies or incur any indebtedness
being withdrawn or inhibited or being capable of becoming or being withdrawn
or inhibited;
(ii) the creation, save in the ordinary and usual course of
business, or 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 HEIT Group or any such mortgage, charge or other security
interest (whenever created, arising or having arisen) having become
enforceable;
(iii) any such arrangement, agreement, lease, licence, franchise,
permit or other instrument being terminated or the rights, liabilities,
obligations or interests of any member of the Wider HEIT Group being adversely
modified or adversely affected or any obligation or liability arising or any
adverse action being taken or arising thereunder;
(iv) any liability of any member of the Wider HEIT Group to make
any severance, termination, bonus or other payment to any of its directors, or
other officers;
(v) the rights, liabilities, obligations, interests or business
of any member of the Wider HEIT Group or any member of the Wider Drax Group
under any such arrangement, agreement, licence, permit, lease or instrument or
the interests or business of any member of the Wider HEIT Group or any member
of the Wider Drax Group in or with any other person or body or firm or company
(or any arrangement or arrangement relating to any such interests or business)
being or becoming capable of being terminated, or adversely modified or
adversely affected or any onerous obligation or liability arising or any
adverse action being taken thereunder;
(vi) any member of the Wider HEIT Group ceasing to be able to
carry on business under any name under which it presently carries on business;
(vii) the value of, or the financial or trading position or
prospects of, any member of the Wider HEIT Group being prejudiced or adversely
affected; or
(viii) the creation or acceleration of any liability (actual or
contingent) by any member of the Wider HEIT Group other than trade creditors
or other liabilities incurred in the ordinary course of business or in
connection with the Acquisition,
and, except as Disclosed, no event having occurred which, under any provision
of any arrangement, agreement, licence, permit, franchise, lease or other
instrument to which any member of the Wider HEIT Group is a party or by or to
which any such member or any of its assets are bound, entitled or subject,
would or might result in any of the events or circumstances as are referred to
in Conditions 5(c)(i) to (viii);
Certain events occurring since 31 October 2024
(d) except as Disclosed, no member of the Wider HEIT Group having
since 31 October 2024:
(i) issued or agreed to issue or authorised or proposed or
announced its intention to authorise or propose the issue of additional shares
of any class, or securities or securities convertible into, or exchangeable
for, or rights, warrants or options to subscribe for or acquire, any such
shares, securities or convertible securities or transferred or sold or agreed
to transfer or sell or authorised or proposed the transfer or sale of HEIT
Shares out of treasury (except, where relevant, as between HEIT and
wholly-owned subsidiaries of HEIT or between the wholly-owned subsidiaries of
HEIT);
(ii) recommended, declared, paid or made or proposed to
recommend, declare, pay or make any bonus, dividend or other distribution
(whether payable in cash or otherwise) other than dividends (or other
distributions whether payable in cash or otherwise) lawfully paid or made by
any wholly-owned subsidiary of HEIT to HEIT or any of its wholly-owned
subsidiaries;
(iii) other than pursuant to the Acquisition (and except for
transactions between HEIT and its wholly-owned subsidiaries or between the
wholly-owned subsidiaries of HEIT and transactions in the ordinary course of
business) implemented, effected, authorised or proposed or announced its
intention to implement, effect, authorise or propose any merger, demerger,
reconstruction, amalgamation, scheme, commitment or acquisition or disposal of
assets or shares or loan capital (or the equivalent thereof) in any
undertaking or undertakings in any such case to an extent which is material in
the context of the Wider HEIT Group taken as a whole;
(iv) except for transactions between HEIT and its wholly-owned
subsidiaries or between the wholly-owned subsidiaries of HEIT, and except for
transactions in the ordinary course of business, disposed of, or transferred,
mortgaged or created any security interest over any asset or any right, title
or interest in any material asset or authorised, proposed or announced any
intention to do so;
(v) except for transactions between HEIT and its wholly-owned
subsidiaries or between the wholly-owned subsidiaries of HEIT, issued,
authorised or proposed or announced an intention to authorise or propose, the
issue of or made any change in or to the terms of any debentures or become
subject to any contingent liability or incurred or increased any indebtedness
which is material in the context of the Wider HEIT Group as a whole;
(vi) entered into or varied or authorised, proposed or announced
its intention to enter into or vary any material contract, arrangement,
agreement, transaction or commitment (whether in respect of capital
expenditure or otherwise) except in the ordinary course of business which is
of a long term, unusual or onerous nature or magnitude or which is or which
involves or could reasonably be expected to involve an obligation of a nature
or magnitude which is likely to be materially restrictive on the business of
any member of the Wider HEIT Group which is or could reasonably be expected to
be material in the context of the Wider HEIT Group as a whole;
(vii) entered into or materially varied the terms of, or made any
offer (which remains open for acceptance) to enter into or vary to a material
extent the terms of any contract, service agreement, commitment or arrangement
with any director;
(viii) purchased, redeemed or repaid or announced any proposal to
purchase, redeem or repay any of its own shares or other securities or reduced
or, except in respect of the matters mentioned in sub-paragraph (i) above,
made any other change to any part of its share capital;
(ix) other than with respect to claims between HEIT and its
wholly-owned subsidiaries or between such wholly-owned subsidiaries or in the
ordinary course of business, waived, compromised or settled any claim which is
material in the context of the Wider HEIT Group as a whole;
(x) terminated or varied the terms of any agreement or
arrangement between any member of the Wider HEIT Group and any other person in
a manner which would or might reasonably be expected to have a material
adverse effect on the financial position of the Wider HEIT Group taken as a
whole;
(xi) except as disclosed on publicly available registers or in
connection with the Acquisition, made any alteration to its memorandum or
articles of association or other incorporation documents (in each case, other
than in connection with the implementation of the Acquisition) which is
material in the context of the Acquisition;
(xii) been unable, or admitted in writing that it is unable, to pay
its debts or commenced negotiations with one or more of its creditors with a
view to rescheduling or restructuring any of its indebtedness, or having
stopped or suspended (or threatened to stop or suspend) payment of its debts
generally or ceased or threatened to cease carrying on all or a substantial
part of its business;
(xiii) other than in respect of a member of the Wider HEIT Group which
is dormant and was solvent at the relevant time, taken or proposed any steps,
corporate action or had any legal proceedings instituted or threatened against
it in relation to the suspension of payments, a moratorium of any
indebtedness, its winding-up (voluntary or otherwise), dissolution,
reorganisation or for the appointment of a receiver, administrator, manager,
administrative receiver, trustee or similar officer of all or any of its
assets or revenues or any analogous or equivalent steps or proceedings in any
jurisdiction or appointed any analogous person in any jurisdiction or had any
such person appointed;
(xiv) (except for transactions between HEIT and its wholly-owned
subsidiaries or between the wholly-owned subsidiaries), made, authorised,
proposed or announced an intention to propose any change in its loan capital
other than in the ordinary course of business and, in each case, to the extent
which is material in the context of the Wider HEIT Group taken as a whole or
in the context of the Acquisition;
(xv) entered into, implemented or authorised the entry into, any
joint venture, asset or profit sharing arrangement, partnership or merger of
business or corporate entities (other than the Scheme);
(xvi) having taken (or agreed or proposed to take) any action which
requires or would require the consent of the Panel or the approval of HEIT
Shareholders in general meeting in accordance with, or as contemplated by,
Rule 21.1 of the Code; or
(xvii) entered into any agreement, arrangement, commitment or contract
otherwise than in the ordinary course of business or passed any resolution or
made any offer (which remains open for acceptance) with respect to or
announced an intention to, or to propose to, effect any of the transactions,
matters or events referred to in this Condition 5((d));
No adverse change, litigation, regulatory enquiry or similar
(e) except as Disclosed, since 31 October 2024 there having
been:
(i) no adverse change and no circumstance having arisen which
would or might reasonably be expected to result in any adverse change in, the
business, assets, financial or trading position or profits or prospects or
operational performance of any member of the Wider HEIT Group which is
material in the context of the Wider HEIT Group taken as a whole;
(ii) no litigation, arbitration proceedings, prosecution or
other legal proceedings having been threatened, announced or instituted by or
against or remaining outstanding against or in respect of, any member of the
Wider HEIT Group or to which any member of the Wider HEIT Group is or may
become a party (whether as claimant, defendant or otherwise) having been
threatened, announced, instituted or remaining outstanding by, against or in
respect of, any member of the Wider HEIT Group, in each case which might
reasonably be expected to have a material adverse effect on the Wider HEIT
Group taken as a whole;
(iii) no enquiry, review or investigation by, or complaint or
reference to, any Third Party against or in respect of any member of the Wider
HEIT Group having been threatened, announced or instituted or remaining
outstanding by, against or in respect of any member of the Wider HEIT Group,
in each case which might reasonably be expected to have a material adverse
effect on the Wider HEIT Group taken as a whole;
(iv) no contingent or other liability having arisen or become
apparent to Drax Bidco or increased other than in the ordinary course of
business which is reasonably likely to affect adversely the business, assets,
financial or trading position or profits or prospects of any member of the
Wider HEIT Group to an extent which is material in the context of the Wider
HEIT Group taken as a whole; and
(v) no steps having been taken and no omissions having been made
which are likely to result in the withdrawal, cancellation, termination or
modification of any licence held by any member of the Wider HEIT Group which
is necessary for the proper carrying on of its business and the withdrawal,
cancellation, termination or modification of which might reasonably be
expected to have a material adverse effect on the Wider HEIT Group taken as a
whole;
No discovery of certain matters regarding information, liabilities and
environmental issues
(f) except as Disclosed, Drax Bidco not having discovered that:
(i) any financial, business or other information concerning
the Wider HEIT Group publicly announced prior to the date of this announcement
or disclosed at any time to any member of the Wider Drax Group by or on behalf
of any member of the Wider HEIT Group prior to the date of this announcement
is misleading, contains a material misrepresentation of any fact, or omits to
state a fact necessary to make that information not misleading and which was
not subsequently corrected before the date of this announcement by disclosure
either publicly or otherwise to Drax Bidco or its professional advisers;
(ii) any member of the Wider HEIT Group or any partnership,
company or other entity in which any member of the Wider HEIT Group has a
significant economic interest and which is not a subsidiary undertaking of
HEIT is, otherwise than in the ordinary course of business, subject to any
liability, contingent or otherwise and which is material in the context of the
Wider HEIT Group taken as a whole;
(iii) any past or present member of the Wider HEIT Group has not
complied in any material respect with all applicable legislation, regulations
or other requirements of any jurisdiction or any Authorisations relating to
the use, treatment, storage, carriage, disposal, discharge, spillage, release,
leak or emission of any waste or hazardous substance or any substance likely
to impair the environment (including property) or harm human or animal health
or otherwise relating to environmental matters or the health and safety of
humans, which non-compliance would be likely to give rise to any material
liability including any penalty for non-compliance (whether actual or
contingent) on the part of any member of the Wider HEIT Group;
(iv) there has been a material disposal, discharge, spillage,
accumulation, release, leak, emission or the migration, production, supply,
treatment, storage, transport or use of any waste or hazardous substance or
any substance likely to impair the environment (including any property) or
harm human or animal health which (whether or not giving rise to
non-compliance with any law or regulation), would be likely to give rise to
any material liability (whether actual or contingent) on the part of any
member of the Wider HEIT Group;
(v) there is or is reasonably likely to be any obligation or
liability (whether actual or contingent) or requirement to make good,
remediate, repair, reinstate or clean up any property, asset or any controlled
waters currently or previously owned, occupied, operated or made use of or
controlled by any past or present member of the Wider HEIT Group (or on its
behalf), or in which any such member may have or previously have had or be
deemed to have had an interest, under any environmental legislation, common
law, regulation, notice, circular, Authorisation or order of any Third Party
in any jurisdiction or to contribute to the cost thereof or associated
therewith or indemnify any person in relation thereto; or
(vi) circumstances exist (whether as a result of making the
Acquisition or otherwise) which would be reasonably likely to lead to any
Third Party instituting (or whereby any member of the Wider HEIT Group would
be likely to be required to institute), an environment audit or take any steps
which would in any such case be reasonably likely to result in any actual or
contingent liability to improve or install new plant or equipment or to make
good, repair, reinstate or clean up any property of any description or any
asset now or previously owned, occupied or made use of by any past or present
member of the Wider HEIT Group (or on its behalf) or by any person for which a
member of the Wider HEIT Group is or has been responsible, or in which any
such member may have or previously have had or be deemed to have had an
interest in any case;
Anti-corruption
(g) Drax Bidco not having discovered that:
(i) any member of the Wider HEIT Group or any person that
performs or has performed services for or on behalf of any such company is or
has engaged in any activity, practice or conduct which would constitute an
offence under the Bribery Act 2010 or any other applicable anti-corruption
legislation; or
(ii) any member of the Wider HEIT Group has engaged in any
transaction which would cause any member of the Wider Drax Group to be in
breach of applicable law or regulation upon completion of the Acquisition,
including the economic sanctions of the United States Office of Foreign Assets
Control or HM Treasury, or any government, entity or individual targeted by
any of the economic sanctions of the United Nations, United States or the
European Union or any of its member states;
No criminal property
(h) Drax Bidco not having discovered that any asset of any
member of the Wider HEIT Group constitutes criminal property as defined by
Section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph
(b) of that definition).
Part B: Certain further terms of the Acquisition
6
Subject to the requirements of the Panel, Drax Bidco reserves the right, in its sole discretion, to waive, in whole or in part, all or any of the Conditions set out in Part A of Appendix I above, except Conditions 2.1(i), 2.2(i) and 2.3(i), which cannot be waived. If any of Conditions 2.1(ii), 2.2(ii), and 2.3(ii) is not satisfied by the relevant deadline specified in the relevant Condition, Drax Bidco shall make an announcement by 8.00 a.m. on the Business Day following such deadline confirming whether it has invoked the relevant Condition, waived the relevant deadlines, or agreed with HEIT to extend the relevant deadline.
7 If Drax Bidco is required by the Panel to make an offer for
HEIT Shares under the provisions of Rule 9 of the Code, Drax Bidco may make
such alterations to any of the above Conditions and terms of the Acquisition
as are necessary to comply with the provisions of that Rule.
8 Drax Bidco shall be under no obligation to waive (if capable
of waiver), to determine to be or remain satisfied or to treat as fulfilled
any of the Conditions in Part A of Appendix I above that are capable of waiver
by a date earlier than the latest date for the fulfilment or waiver 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 satisfaction or fulfilment.
9 Under Rule 13.5(a) of the Code and subject to paragraph 10
below, Drax Bidco may only invoke a Condition so as to cause the Acquisition
not to proceed, to lapse, or to be withdrawn with the consent of the Panel.
The Panel shall normally only give its consent if the circumstances which give
rise to the right to invoke the Condition are of material significance to Drax
Bidco in the context of the Acquisition. This shall be judged by reference to
the facts of each case at the time that the relevant circumstances arise.
10 Condition 1 and Conditions 2.1, 2.2 and 2.3 in Part A of Appendix
I above, and, if applicable, any acceptance condition if the Acquisition is
implemented by means of a takeover offer, are not subject to Rule 13.5(a) of
the Code.
11 Any Condition that is subject to Rule 13.5(a) of the Code may be
waived by Drax Bidco.
12 The HEIT Shares acquired under the Acquisition shall be acquired
fully paid and free from all liens, equities, charges, encumbrances, options,
rights of pre-emption and any other third party rights and interests of any
nature and together with all rights now or hereafter attaching or accruing to
them, including, without limitation, voting rights and the right to receive
and retain in full all dividends and other distributions (if any) declared,
made or paid, or any other return of value (whether by reduction of share
capital or share premium account or otherwise) made on or after the Effective
Date.
13 If, on or after the date of this announcement and prior to or on
the Effective Date, any dividend, distribution or other return of value is
declared, paid or made, or becomes payable by HEIT, Drax Bidco reserves the
right (without prejudice to any right of Drax Bidco, with the consent of the
Panel, to invoke Condition 3(d)(ii) of Appendix I above) to reduce the
consideration payable under the Acquisition to reflect the aggregate amount of
such dividend, distribution, or other return of value or excess. In such
circumstances, HEIT Shareholders shall be entitled to retain any such
dividend, distribution, or other return of value declared, made, or paid.
14 If on or after the date of this announcement, and to the extent
that any such dividend, distribution or other return of value has been
declared, paid, or made, or becomes payable by HEIT on or prior to the
Effective Date and Drax Bidco exercises its rights under paragraph 13 to
reduce the consideration payable under the terms of the Acquisition, any
reference in this announcement to the consideration payable under the terms of
the Acquisition shall be deemed to be a reference to the consideration as so
reduced.
15 If and to the extent that such a dividend, distribution, or other
return of value has been declared or announced, but not paid or made, or is
not payable by reference to a record date on or prior to the Effective Date
and is or shall be: (i) transferred pursuant to the Acquisition on a basis
which entitles Drax Bidco to receive the dividend, distribution, or other
return of value and to retain it; or (ii) cancelled, the consideration payable
under the terms of the Acquisition shall not be subject to change in
accordance with paragraph 13.
16 Drax Bidco also reserves the right to reduce the consideration
payable under the Acquisition in such circumstances as are, and by such amount
as is, permitted by the Panel.
17 Any exercise by Drax Bidco of its rights referred to in paragraph
13 shall be the subject of an announcement and, for the avoidance of doubt,
shall not be regarded as constituting any revision or variation of the
Acquisition.
18 Drax Bidco reserves the right to elect (with the consent of the
Panel and in compliance with the Takeover Code) to implement the Acquisition
by way of a Takeover Offer for the HEIT Shares as an alternative to the
Scheme. In such event, the Takeover Offer shall be implemented on the same
terms, so far as applicable, as those which would apply to the Scheme, subject
to appropriate amendments, including (without limitation) an acceptance
condition set at a level permitted by the Panel. Further, if sufficient
acceptances of such offer are received and/or sufficient HEIT Shares are
otherwise acquired, it is the intention of Drax Bidco to apply the provisions
of the Companies Act to acquire compulsorily any outstanding HEIT Shares to
which such offer relates.
19 The availability of the Acquisition to persons not resident in
the United Kingdom may be affected by the laws of the relevant jurisdictions.
Persons who are not resident in the United Kingdom should inform themselves
about and observe any applicable requirements.
20 The Acquisition is not being made, directly or indirectly, in,
into or from, or by use of the mails of, or by any means of instrumentality
(including, but not limited to, facsimile, email or other electronic
transmission, telex or telephone) of interstate or foreign commerce of, or of
any facility of a national, state or other securities exchange of, any
Restricted Jurisdiction where to do so would violate the laws of that
jurisdiction.
21 The Acquisition is governed by the law of England and Wales and
is subject to the jurisdiction of the courts of England and Wales and to the
Conditions and further terms set out in this Appendix I and to be set out in
the Scheme Document. The Acquisition is subject to the applicable requirements
of the Companies Act, the Court, the Code, the Panel, the London Stock
Exchange and the Financial Conduct Authority.
22 Each of the Conditions shall be regarded as a separate Condition
and shall not be limited by reference to any other Condition.
APPENDIX II
SOURCES OF INFORMATION AND BASES OF CALCULATION
In this announcement, unless otherwise stated or the context otherwise
requires, the following bases and sources have been used.
1. Financial information relating to Drax has been extracted or
derived (without any adjustment) from the annual report and audited accounts
of Drax for the financial year ended 31 December 2024.
2. Financial information relating to HEIT has been extracted or
derived (without any material adjustment) from the annual report and audited
accounts of HEIT for the financial year ended 31 October 2024.
3. The value of each HEIT Share is calculated:
(i) by reference to the price of 79.2 pence per HEIT Share,
being the Closing Price on the Latest Practicable Date;
(ii) on the basis of the existing number of HEIT Shares in issue
referred to in paragraph 4 below.
4. As at the close of business on the Latest Practicable Date,
HEIT had in issue 227,128,295 HEIT Shares (excluding shares held in treasury).
Therefore, the total voting rights in issue in HEIT at the latest practicable
date is 227,128,295.
5. Unless otherwise stated, all prices, volume weighted average
prices and Closing Prices for HEIT Shares are based upon London Stock Exchange
quotations derived from Bloomberg for the relevant periods and have been
rounded to one decimal place.
6. Unless otherwise stated, information relating to HEIT's NAV has
been sourced from HEIT's financial results for the year ended 31 October 2024.
APPENDIX III
IRREVOCABLE UNDERTAKINGS
Irrevocable Undertakings from HEIT Directors and Shareholders
The following holders or controllers of HEIT Shares have given irrevocable
undertakings to vote in favour of the Scheme at the Court Meeting and the
resolutions to be proposed at the General Meeting and, if Drax Bidco exercises
its right to implement the Acquisition by way of a Takeover Offer, to accept
or procure acceptance of such offer:
Part A - HEIT Directors' Irrevocable Undertakings
Name of HEIT Director Number of HEIT Shares in respect of which undertaking is given Percentage of HEIT issued share capital as at the Latest Practicable Date
Norman Crighton 16,528 0.01%
Janine Freeman 29,823 0.01%
Hugh McNeal 26,514 0.01%
William Rickett 16,633 0.01%
Shefaly Yogendra 11,618 0.01%
TOTAL 101,116 0.04%
The obligations of the HEIT Directors under the irrevocable undertakings shall
lapse and cease to have effect if:
· Drax Bidco announces, with the consent of the Panel, that it does
not intend to proceed with the Acquisition;
· the Acquisition (whether implemented by way of a Scheme or a
Takeover Offer) is withdrawn, lapses or otherwise terminates in accordance
with its terms;
· any competing offer for the entire issued share capital of HEIT
is declared unconditional or, if implemented by way of a scheme of
arrangement, becomes effective; or
· the Acquisition has not become effective in accordance with its
terms, or been declared unconditional, by the Long-stop Date.
The irrevocable undertakings therefore remain binding in the event an
alternate or higher competing possible offer or offer is made for HEIT.
Part B - Non-director HEIT Shareholder irrevocable undertakings
Name of HEIT Shareholder giving undertaking Number of HEIT Shares in respect of which undertaking is given Percentage of HEIT issued share capital as at the Latest Practicable Date
Premier Miton 7,113,857 3.1%
Schroders 37,334,777 16.4%
TOTAL 44,448,634 19.6%
The irrevocable undertakings shall lapse and cease to have effect if:
· the Scheme Document or Offer Document (as the case may be) is not
published within 28 days of the date of publication of this announcement (or
within such longer period as HEIT and Drax Bidco may agree, with the consent
of the Panel);
· Drax Bidco announces, with the consent of the Panel that it does
not intend to proceed with the Acquisition;
· the Scheme does not become effective or the Offer does not become
unconditional before 11.59 p.m. on the Long-stop Date;
· the Acquisition (whether implemented by way of a Scheme or a
Takeover Offer) is withdrawn, lapses or otherwise terminates in accordance
with its terms;
· any third party other than Drax Bidco (or any person acting in
concert with Drax Bidco) announces pursuant to Rule 2.7 of the Code a firm
intention to make a competing offer for the entire issued share capital of
HEIT on terms which represent certain agreed levels of improvement in the
amount of value of the consideration offered under the terms of the
Acquisition; or
· any competing offer for the entire issued share capital of HEIT
is declared unconditional or, if proceeding by way of a scheme of arrangement,
becomes effective.
APPENDIX IV
DEFINITIONS
The following definitions apply throughout this announcement unless the
context requires otherwise:
Acquisition the recommended cash offer pursuant to which Drax shall acquire the entire
issued ordinary share capital of HEIT to be effected by means of the Scheme
(or by way of Takeover Offer under certain circumstances described in this
announcement) and, where the context admits, any subsequent revision,
variation, extension or renewal thereof
Asset Sale has the meaning given in paragraph 4 of this announcement
Authorisations regulatory authorisations, orders, recognitions, grants, consents, clearances,
confirmations, certificates, licences, permissions or approvals
BESS battery energy storage system
BM the Balancing Mechanism administered by NESO
Business Day a day (other than Saturdays, Sundays and public holidays in the UK) on which
banks are open for business in London
Closing Price the closing middle market price of a HEIT Share on a particular trading day as
derived from the Daily Official List published by the London Stock Exchange
Code the City Code on Takeovers and Mergers
Companies Act the Companies Act 2006, as amended
Conditions the conditions to the implementation of the Acquisition, as set out in
Appendix I to this announcement and to be set out in the Scheme Document
Confidentiality Agreement the confidentiality agreement dated 7 August 2024 between Drax Corporate and
HEAL, as described in paragraph 12 of this announcement
Consideration the consideration of 88.0 pence in cash per HEIT Share payable by Drax Bidco
to HEIT Shareholders pursuant to the Acquisition
Court the High Court of Justice in England and Wales
Court Hearing the hearing by the Court of the application to sanction the Scheme under Part
26 of the Companies Act
Court Meeting the meeting of Scheme Shareholders to be convened pursuant to an order of the
Court under the Companies Act for the purpose of considering and, if thought
fit, approving the Scheme (with or without amendment), including any
adjournment thereof, notice of which is to be contained in the Scheme Document
Court Order the order of the Court sanctioning the Scheme under section 899 of the
Companies Act
CREST the system for the paperless settlement of trades in securities and the
holding of uncertificated securities operated by Euroclear
Dealing Arrangement an arrangement of the kind referred to in Note 11(a) on the definition of
acting in concert in the Code
Dealing Disclosure has the same meaning as in Rule 8 of the Code
Drax Drax Group plc, a public limited company incorporated in England and Wales
with registered number 05562053 and whose registered office is at Drax Power
Station, Selby, North Yorkshire, YO8 8PH
Drax Bidco Drax BESS Holdco Limited, a private limited company incorporated in England
and Wales with registered number 16152612 and whose registered office is at
Drax Power Station, Selby, North Yorkshire, United Kingdom, YO8 8PH
Drax Corporate Drax Corporate Limited, a private limited company incorporated in England and
Wales with registered number 05562058 and whose registered office is at Drax
Power Station, Selby, North Yorkshire, United Kingdom, YO8 8PH
Drax Directors the board of directors of Drax at the time of this announcement or, where the
context so requires, the directors of Drax from time to time
Disclosed the information disclosed by, or on behalf of HEIT, (i) in the annual report
and accounts of the HEIT Group for the financial year ended 31 October 2024;
(ii) in this announcement; (iii) in any other announcement to a Regulatory
Information Service by, or on behalf of HEIT prior to the date of this
announcement; or (vi) as otherwise fairly disclosed to Drax (or its respective
officers, employees, agents or advisers) prior to the date of this
announcement
Disclosure Guidance and Transparency Rules the disclosure guidance and transparency rules made by the FCA under Part VI
of FSMA
EBITDA earnings before interest, taxes, depreciation and amortisation
Effective in the context of the Acquisition:
(a) if the Acquisition is implemented by way of the Scheme, the
Scheme having become effective pursuant to its terms upon the delivery of a
copy of the Court Order to the Registrar of Companies; or
(b) if the Acquisition is implemented by way of a Takeover Offer,
such Takeover Offer having been declared and become unconditional in
accordance with the Code
Effective Date the date on which either (i) the Scheme becomes effective in accordance with
its terms; or (ii) if Drax Bidco elects, and the Panel consents, to implement
the Acquisition by way of a takeover offer (as defined in Chapter 3 of Part 28
of the Companies Act), the date on which such takeover offer becomes or is
declared unconditional
Euroclear Euroclear UK & International Limited
Excluded Shares any HEIT Shares:
(a) held by or on behalf of Drax Bidco or the Wider Drax Group; or
(b) held in treasury,
in each case, immediately prior to the Scheme Record Time;
FCA or Financial Conduct Authority the Financial Conduct Authority acting in its capacity as the competent
authority for the purposes of Part VI of the UK Financial Services and Markets
Act 2000
Foresight Foresight Group LLP
Foresight Rule 2.4 Announcement the joint announcement by HEIT and Foresight, on behalf of one or more funds
managed by Foresight and its affiliates, on 17 March 2025 of a possible cash
offer for the entire issued share capital of HEIT by Foresight at 84.0 pence
per HEIT Share
FlexGen Drax's pumped storage hydro facility at Cruachan (440MW), its run-of-river
hydro facilities at Lanark and Galloway and three open cycle gas turbine
assets (c.900MW, which are currently under development)
Forms of Proxy the forms of proxy for use in connection with each of the Court Meeting and
the General Meeting which shall accompany the Scheme Document
FQ1 financial quarter one, being the first three-month period of a company's
financial year
FSMA the Financial Services and Markets Act 2000, as amended from time to time
FY 2023 the financial year of HEIT ended 31 October 2023
FY 2024 the financial year of HEIT ended 31 October 2024
FY 2025 the financial year of HEIT ending 31 October 2025
General Meeting the general meeting of HEIT Shareholders (including any adjournment thereof)
to be convened in connection with the Scheme to consider and, if thought fit,
to approve the resolution(s) (with or without amendment) and including any
adjournment, postponement or reconvening thereof, notice of which is to be
contained in the Scheme Document
GW gigawatt
GWh gigawatt hour
HEAL Harmony Energy Advisors Limited, investment adviser to HEIT
Harmony Energy Harmony Energy Limited, the parent company of HEAL
HEIT Harmony Energy Income Trust Plc, a company incorporated in England and Wales
with registered number 13656587 and whose registered office is at The Scalpel
18th Floor, 52 Lime Street, London, England, EC3M 7AF
HEIT Directors the board of directors of HEIT at the time of this announcement or, where the
context so requires, the directors of HEIT from time to time
HEIT Group HEIT and its subsidiary undertakings and, where the context permits, each of
them
HEIT Shareholders or Shareholders the holders of HEIT Shares
HEIT Shares the ordinary shares of £0.01 each in the capital of HEIT
IPO initial public offering
J.P. Morgan Cazenove J.P. Morgan Securities plc, financial adviser and corporate broker to Drax
Latest Practicable Date 24 March 2025, being the latest practicable date prior to this announcement
London Stock Exchange London Stock Exchange plc
Long-stop Date 31 July 2025, or such later date as may be agreed by Drax Bidco and HEIT (with
the Panel's consent and as the Court may approve (if such approval(s) are
required))
Market Abuse Regulation the retained EU law version of Regulation (EU) No. 596/2014 of the European
Parliament and the Council of 16 April 2014 on market abuse as it forms part
of UK domestic law by virtue of the European Union (Withdrawal) Act 2018, as
amended from time to time (including by the Market Abuse (Amendment) (EU Exit)
Regulations 2019 (SI 2019/310))
MW megawatt
MWh megawatt hour
NESO the National Energy System Operator (responsible for, amongst other things,
balancing the system) for Great Britain, formerly operating under the name
"National Grid ESO" (NGESO)
Net Asset Value or NAV the value, as at any date, of the assets of HEIT after deduction of all
liabilities determined in accordance with the accounting policies adopted by
HEIT from time to time
Net Asset Value per HEIT Share at any time, the Net Asset Value attributable to the HEIT Shares divided by
the number of HEIT Shares in issue (other than HEIT Shares held as treasury
shares) at the date of calculation
NSI Act the National Security and Investment Act 2021
OBP the Open Balancing Platform developed by NESO in Great Britain to enhance the
BM of the electricity network
Offer Document the document containing a Takeover Offer
Opening Position Disclosure has the same meaning as in Rule 8 of the Code
Overseas Shareholders HEIT Shareholders (or nominees of, or custodians or trustees for HEIT
Shareholders) not resident in, or nationals or citizens of, the United Kingdom
Panel the Panel on Takeovers and Mergers
Panmure Liberum Panmure Liberum Limited, sole financial adviser and rule 3 adviser and joint
broker to HEIT
Registrar of Companies the Registrar of Companies in England and Wales
Regulatory Information Service any information service authorised from time to time by the FCA for the
purpose of disseminating regulatory announcements
Relevant Authority any central bank, ministry, governmental, quasi-governmental, supranational
(including the European Union), statutory, regulatory or investigative body,
authority or tribunal (including any national or supranational anti-trust,
competition or merger control authority, any sectoral ministry or regulator
and any foreign investment review body), national, state, municipal or local
government (including any subdivision, court, tribunal, administrative agency
or commission or other authority thereof), any entity owned or controlled by
them, any private body exercising any regulatory, taxing, importing or other
authority, trade agency, association, institution or professional or
environmental body in any jurisdiction, including, for the avoidance of doubt,
the Panel
Restricted Jurisdiction any jurisdiction where local laws or regulations may result in a significant
risk of civil, regulatory or criminal exposure if information concerning the
Acquisition is sent or made available to HEIT Shareholders
Restricted Overseas Person HEIT Shareholders resident in, or nationals or citizens of, Restricted
Jurisdictions or who are nominees or custodians, trustees or guardians for,
citizens, residents or nationals of such Restricted Jurisdictions
Scheme or Scheme of Arrangement the proposed scheme of arrangement under Part 26 of the Companies Act between
HEIT and the HEIT Shareholders in connection with the Acquisition, with or
subject to any modification, addition or condition approved or imposed by the
Court and agreed by HEIT and Drax Bidco
Scheme Document the document to be sent to HEIT Shareholders containing, amongst other things,
the Scheme and the notices convening the Court Meeting and the General Meeting
Scheme Record Time the time and date to be specified in the Scheme Document by reference to which
the entitlements of Scheme Shareholders under the Scheme will be determined,
expected to be 6.00 p.m. on the Business Day immediately prior to the
Effective Date
Scheme Shares unless otherwise defined in the Scheme Document, the HEIT Shares:
(a) in issue at the date of the Scheme Document;
(b) (if any) issued after the date of the Scheme Document but before
the Voting Record Time and which remain in issue at the Scheme Record Time;
and
(c) (if any) issued at or after the Voting Record Time but at or
before the Scheme Record Time on terms that the holder thereof shall be bound
by this Scheme or in respect of which the original or any subsequent holders
thereof are, or have agreed in writing to be, bound by this Scheme,
in each case (where the context requires) which remain in issue at the Scheme
Record Time, other than any Excluded Shares
Secretary of State the Secretary of State in the Cabinet Office
Seed Portfolio the initial portfolio of five BESS development projects acquired by HEIT at
IPO
Significant Interest in relation to an undertaking, a direct or indirect interest of 30 per cent.
or more of the total voting rights conferred by the equity share capital (as
defined in Section 548 of the Companies Act) of such undertaking
Stifel Stifel Nicolaus Europe Limited, joint broker to HEIT
Takeover Offer should the Acquisition be implemented by way of a Takeover Offer as defined in
Chapter 3 of Part 28 of the Companies Act, the offer to be made by or on
behalf of Drax Bidco to acquire the entire issued ordinary share capital of
HEIT and, where the context admits, any subsequent revision, variation,
extension or renewal of such takeover offer
Third Party each of a central bank, government or governmental, quasi-governmental,
supranational, statutory, regulatory, environmental, administrative, fiscal or
investigative body, court, trade agency, association, institution,
environmental body, employee representative body or any other body or person
whatsoever in any jurisdiction
United Kingdom or UK the United Kingdom of Great Britain and Northern Ireland
United States or US the United States of America, its territories and possessions, any state of
the United States of America, the District of Columbia and all other areas
subject to its jurisdiction and any political sub-division thereof
US Exchange Act the US Securities Exchange Act 1934, as amended
Voting Record Time the time and date to be specified in the Scheme Document by reference to which
entitlement to vote at the Court Meeting will be determined, expected to be
6.00 p.m. on the day which is two Business Days before the date of the Court
Meeting or if the Court Meeting is adjourned, 6.00 p.m. on the day which is
two Business Days prior to the date of such adjourned meeting
Wider HEIT Group HEIT and associated undertakings and any other body corporate, partnership,
joint venture or person in which HEIT and such undertakings (aggregating their
interests) have a Significant Interest
Wider Drax Group Drax and associated undertakings and any other body corporate, partnership,
joint venture or person in which Drax and all such undertakings (aggregating
their interests) have a Significant Interest
For the purposes of this announcement, "subsidiary", "subsidiary undertaking",
"undertaking" and "associated undertaking" have the respective meanings given
thereto by the Companies Act.
All references to "pounds", "pounds Sterling", "Sterling", "£", "pence",
"penny" and "p" are to the lawful currency of the United Kingdom.
All the times referred to in this announcement are London times unless
otherwise stated.
References to the singular include the plural and vice versa.
All references to statutory provisions or law or to any order or regulation
shall be construed as a reference to that provision, law, order or regulation
as extended, modified, replaced or re-enacted from time to time and all
statutory instruments, regulations and order from time to time made thereunder
or deriving validity therefrom.
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