Aim-traded clean energy investment company Leaf Clean Energy (LEAF:145p) has announced a bumper cash return to shareholders after Invenergy Wind LLC, North America's largest independently owned wind power generation company, settled the damages Leaf is entitled to in relation to the court-ordered redemption of its 2.3 per cent equity stake in Invenergy Wind LLC.
Leaf currently has £83.6m (159p a share) cash on its balance sheet and plans to return to shareholders £53.1m, at 151.94p per share, by way of a compulsory redemption of 66.47 per cent of the issued share capital. Invenergy has appealed the prejudgment interest award of US$30m, so Leaf is reserving an equivalent cash amount to the interest award together with its best estimate of further costs and potential liabilities until final resolution of Invenergy's appeal filed in the Delaware Supreme Court. The directors believe the appeal is without merit, and so do I. The Delaware Supreme Court will consider the appeal, without oral argument, on 18 September 2019. Leaf’s directors anticipate the Supreme Court will issue a written decision soon thereafter.
In the meantime expect cash proceeds of Leaf’s compulsory redemption of two thirds of your shareholdings to be made on Friday, 16 August. That’s good news if you followed my advice to buy the shares, at 38p, as it crystallises a 300 per cent gain on sizeable part of your holding (‘Pointing to a successful outcome’, 19 April 2016). It’s also good news if you followed my recommendation to take advantage of a strong buying opportunity, at 100p a share, when news of the Supreme Court award was first made public (‘Bargain shares: Small-cap buying opportunities, 7 May 2019). My advice is to continue to hold the shares post compulsory redemption and await what I anticipate will be secondary payout later this year. Hold.
■ Simon Thompson's new book Successful Stock Picking Strategies and his second book Stock Picking for Profit can be purchased online at www.ypdbooks.com, or by telephoning YPDBooks on 01904 431 213 to place an order. The books are being sold through no other source and are priced at £16.95 each plus postage and packaging of £2.95, or £3.75 if you purchase both books. Details of the content of both books can be viewed on www.ypdbooks.com.
