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Leaf Clean Energy cash return

Simon Thompson runs his rule over the likely cash returns a clean energy investment company can expect from a US court case.
July 11, 2018

Aim-traded clean energy investment company Leaf Clean Energy (LEAF:18.5p) has returned £19.5m of the $36.2m (£27.6m) of cash it has so far received from Invenergy Wind LLC, North America's largest independently owned wind power generation company, in relation to the Delaware Court of Chancery ordered redemption of Leaf’s stake in that company. Leaf redeemed 55 per cent of its issued share capital at 29.72p a share by way of a compulsory redemption on Wednesday 4 July so now has 52.6m shares in issue.

After paying off all outstanding loans, Leaf currently has £3.1m of cash – a sum worth almost 6p a share – to meet the costs of the appeal against the nominal damages it was awarded in the Delaware Court of Chancery relating to its investment in Invenergy Wind LLC. Leaf’s directors continue to believe the company is entitled to damages of $122.2m plus pre-judgment interest. Taking into account the amount already received from Invenergy, this would represent an additional $85.8m, or 124.5p a share, based on the 52.6m reduced share count.

While Leaf’s directors believe the company is entitled to the damages, if it is unsuccessful in its appeal then they believe that Leaf would still receive additional amounts due under the put/call arrangement that led to the court-ordered redemption. They believe Leaf would be due $50.7m in total less the $36.4m already received from Invenergy. Leaf’s last reported net asset value per share of 39.7¢ (30.3p) is based on it receiving the outstanding $14.3m sum.

Invenergy is likely to contest the $50.7m amount and the trial court has ordered Invenergy to place $15.3m, representing the $14.3m disputed amount plus one year of interest, in a court-controlled account pending resolution of these matters. However, if Leaf does receive the additional $15.3m, a sum worth 22p a share, then shareholders can expect another hefty capital return.

So, having last rated Leaf's shares a hold at 22p (‘From yachts to clean energy’, 23 Apr 2018), and with 55 per cent of your holdings subsequently redeemed at 29.7p a share, I maintain that advice and would await the outcome of the forthcoming court appeal by Leaf. Hold.

 

■ Simon Thompson's new book Successful Stock Picking Strategies can be purchased online at www.ypdbooks.com, or by telephoning YPDBooks on 01904 431 213 to place an order. It is being sold through no other source and is priced at £16.95 plus £2.95 postage and packaging. Full details of the content is available on YPDBooks website.

Simon's second book Stock Picking for Profit has been reprinted and is available to purchase online at www.ypdbooks.com for £16.95, plus £2.95 postage and packaging, or by telephoning YPDBooks on 01904 431 213 to place an order. Simon has published an article outlining the content: 'Secrets to successful stock picking'