Andrew ‘Twiggy’ Forrest emerges as key backer behind Windlab takeover

Mining magnate Andrew ‘Twiggy’ Forrest has emerged as a key backer of a takeover offer for wind farm developer Windlab, which has won the unanimous backing of the company’s directors following the successful negotiation of terms.

In an announcement to the ASX, Windlab confirmed that it had signed a binding ‘Scheme of Implementation Agreement’ with a consortium consisting of both Federation Asset Management and Squadron Wind Energy Development, the latter of which is owned by Andrew Forrest’s Minderoo Group, to purchase all outstanding shares in the company.

Windlab confirmed that under the terms of the takeover offer, shareholders will be paid $1.00 per share, which is an approximately 40 per cent premium on the share price prior to the announcement of the takeover offer, which had been trading around 72 cents per share.

The Windlab board of directors have unanimously recommended that shareholders approve the offer, but it remains subject to both shareholder and court approval under the Corporations Act.

Federation already owns an 18.7 per cent stake in Windlab, and has now been joined by Forrest, who will further expand his interests in the renewable energy space, after making his fortune through iron-ore miner Fortescue Metals Group.

Forrest said that he was attracted by the technical capabilities of Windlab, which was originally formed as a way to commercialise wind modelling software Windscape developed by the CSIRO.

“We’re pleased to be part of the consortium investing in Windlab,” Forrest said. “The unique technical capabilities of the team and the strong portfolio of project opportunities give Windlab a leading position in wind generation in Australia. Alongside our recent investments in solar projects, the investment also underscores Squadron Energy’s vision for a sustainable energy future.”

Through Squadron Energy, Forrest has made several plays in the renewable energy space, reportedly stepping in to finance the completion of the 128MW Cunderdin solar farm in Western Australia. Forrest has also provided early investments in the ambitious Sun Cable project being pursued by Mike Cannon-Brookes and proposes to supply Australian renewable energy to Singapore via an undersea cable.

Through his mining interests in Fortescue Metals Group, Forrest has also expanded his interest in the extraction of lithium, copper and graphite materials, key components used in the production of batteries and components for electric vehicles. Forrest sees the future of mining in the supply of materials for these emerging technologies and has moved away from investments in coal projects.

As part of the takeover proposal, the two takeover entities, Federation and Squadron, have agreed to provide a loan of up to $20 million to Windlab for a period of three years, to help provide additional capital to the business.

The takeover lead, Federation Asset Management, was also confident of Windlab’s potential and its ability to deliver on a strong pipeline of potential future projects.

“Windlab is a natural fit for Federation and our investment partners. We believe that Windlab is the clear leader among Australian wind energy developers, with great management, unique IP and a portfolio comprising of some of the best wind projects in the National Electricity Market,” Federation’s head of renewable energy Stephen Panizza said.

“Our consortium brings not only deep experience in renewables, but the capital necessary to develop the portfolio and capture Windlab’s full potential.”

The signing of the binding agreement would be somewhat of a relief for Windlab management. The company has twice delayed its half-year earnings investor meeting, while it works through the takeover offer at the same time as dealing with an ongoing contractual dispute at its flagship Kennedy Energy Park project.

Windlab is currently working to negotiate a settlement with the key contractor for the Kennedy project, which has encountered lengthy delays, with the hope of avoiding an escalation of the dispute into formal legal proceedings.

Windlab recently confirmed that the value of the Kennedy Energy Project would be written down by $29.4 million, with Windlab holding a 50 per cent share in the project.

Shareholders will receive further information about the takeover offer sometime in May, with the proposal set to be voted on in early June.

The offer values the company at around $70 million, and the full takeover process is expected to be completed by late June.