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Western Wind Energy Corp. (WND), a Canadian renewable-energy developer with projects in the western U.S., rose the most in nine months after the company said it was for sale.
Western Wind jumped 50 percent to C$1.78 at the close in Toronto, the biggest gain since Oct. 11. Prior to the sale announcement yesterday, the shares had fallen 41 percent this year.
The company, which rejected a C$2.50-a-share takeover bid last year, will choose two final advisers to manage and administer the sale process within 10 days, Vancouver-based Western Wind said in a statement. The company is selling now to relieve “consistent suffering” its shareholders have endured as the stock price fell more than 50 percent from a 52-week high after the October bid.
The board said it sees a sale price between the C$2.50 offer and the more than C$5 value that DAI Management Consultants Inc. gave to the company. Potential buyers may be energy companies interested in U.S. tax benefits Western Wind has accumulated during construction of its projects, Chairman Michael Boyd said in a phone interview today. Developers of wind energy get a tax credit of 2.2 cents for each kilowatt-hour of power they generate.
Algonquin Power & Utilities Corp. (AQN) scrapped its bid in October after Western Wind said it “undervalued” the company by at least half. Boyd said he didn’t see another bid from Oakville, Ontario-based Algonquin.
“They are a Canadian-based company that would seem to not be able to realize significant value in” Western Wind, Boyd said.
Western Wind owns and operates three wind projects in California totaling 154.5 megawatts and one 10.5-megawatt combined wind-and-solar plant in Arizona. The company plans to continue developing a project in Puerto Rico that will be included in the sale, according to the statement.
The company was awarded a $78.3 million U.S. grant on July 10 after applying for $90.5 million under the Treasury Department’s 1603 cash grant program.
“It’s a difficult situation because the stock has fallen so much,” said John McIlveen, a Toronto-based analyst with Jacob Securities Inc. who rates the stock a buy. The company’s “fundamental value” is C$2.50 a share, “but now you’re in an auction process.”
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