Western Wind seeks OSC ‘cease trade’ to freeze Brookfield unit’s hostile bid
Western Wind says Brookfield is required to commission a formal and independent valuation to set the takeover price because it is an insider and was privy to “material non-disclosed information” about the target’s biggest wind generation property.
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Animosity between a division of Brookfield Asset Management and takeover target Western Wind Energy Corp. spilled over into a hearing before the Ontario Securities Commission on Thursday.
Brookfield Renewable Energy Partners LP took a minority stake in British Columbia-based Western Wind Energy and emerged as the only bidder for the company, which put itself on the market in July.
Western Wind says Brookfield, a hostile bidder, is required to commission a formal and independent valuation to set the takeover price because it is an insider and was privy to “material non-disclosed information” about the target’s biggest wind generation property.
Western Wind sought Thursday to have a temporary “cease trade” imposed by the commission, essentially freezing Brookfield’s outstanding bid, while the issues are resolved. The $2.60-a-share bid expires Feb. 11.
Markus Koehnen, a lawyer for Western Wind, said Brookfield was within its rights to pursue a bid, even though other interested suitors are unlikely to challenge the large and deep-pocked player with a 16% stake in the firm. But he said there is a “check” on such takeovers involving insiders — the requirement for a formal independent valuation to “protect shareholders from unfairness.”
Brookfield’s lawyer Andrew Gray countered that information shared with Brookfield prior to the bid was not flagged as confidential at the time it was disclosed, nor was it material.
“The public interest isn’t served by stopping the only offer shareholders have,” he said.
He suggested Western Wind is using the dispute as a last-minute tactical manoeuvre, and said the firm is simply not interested in dealing with Brookfield.
He cited colourful language in an email sent to a Brookfield executive by Western Wind chief executive Jeffrey Ciachurski, and he said Mr. Ciarchurski stands to benefit from a bonus if the bid is raised.
Staff of the OSC also presented arguments to the panel. Lawyer Albert Pelletier said commission staff had “mixed” views about the issues, but on balance thought that Western Wind’s requests for a temporary cease trade and “expedited” hearing should not be granted. He said issues raised could be deemed serious, but noted that Western Wind had not brought them forward in a timely manner and that shareholders should not be penalized.
“It’s late, and there’s consequences to that,” he said. “The auction has been on for as much as six months.… The reality is, there’s no other bidder.”
The OSC panel reserved its decision.