Concerned Shareholders of Western Wind Energy Corp.

July 31, 2012 08:30 ET

Concerned Shareholders Announce Nominees for Election to Board of Western Wind Energy Corp.

Express Complete Lack of Confidence in Management's and the Board's Ability to Execute Credible Sale Process

TORONTO, ONTARIO--(Marketwire - July 31, 2012) - Savitr Capital, LLC ("Savitr"), the investment manager to Funds and accounts with significant share holdings in Western Wind Energy Corp. ("Western Wind" or the "Company"), intends to nominate five new directors (the "Savitr Nominees") at the Company's upcoming annual general meeting of shareholders to be held on September 25, 2012 (the "Meeting").

Savitr manages and advises Funds and accounts that have been substantial shareholders of Western Wind since 2008. Along with other major shareholders, Savitr has become increasingly dissatisfied with the Company's performance, and has lost confidence in management and the board of directors.

Savitr manages Funds that invest in clean and renewable energy. Savitr is neither an activist manager nor a short term investor in Western Wind. It has taken this position only after correspondence with the board and management of Western Wind proved to be disappointingly unproductive - an experience that is not unique to Savitr.

"The erratic press release of Sunday July 29, 2012 announcing the sale of Western Wind coupled with what appears to be its failed entrenchment strategy of issuing 13% of the issued and outstanding shares of the Company in exchange for assets of questionable value, has driven Savitr to the conclusion that the current board and management team of Western Wind does not have the resolve, experience or credibility to initiate or conclude a sale process or any other plan to maximize shareholder value," said Andrew Midler, a director nominee and managing member of Savitr Capital. He continued, "As concerned shareholders, we have put together a solid new board with renewable energy, corporate governance and capital markets experience that will immediately focus on a full strategic review with a view to maximizing shareholder value through a credible sale process."

Specific Shareholder Concerns:

  • Erratic Sale Announcement and Failed Promises: Western Wind has followed up its recent announcement on May 15, 2012 of a dilutive and speculative acquisition that would not receive shareholder approval with the announcement on July 29, 2012 which put the Company up for sale. This most recent announcement came without the customary disclosure of an investment bank retainer, the establishment of a special committee or any other real plan on how this sale would be accomplished. Shareholders are now asked to trust the same board and management team that has refused to consider legitimate purchase offers in the past, has refused to negotiate with corporate buyers, and has not followed through with previously announced strategic reviews. A new board of Western Wind comprised of the Savitr Nominees will make a full strategic review with a focus on maximizing shareholder value through a credible sale process.

  • Corporate Governance Issues: Jeff Ciachurski, Western Wind's CEO, also serves as the CEO of Greenbriar Capital Corp. Greenbriar shares four other directors with Western Wind. This direct board overlap between four of the five Western Wind directors must call into question the independence of Western Wind's board. As a further example of a lack of proper governance, CEO Jeff Ciachurski is a member of the compensation committee of the board of Western Wind that sets his own compensation. In addition, the chairman of the Western Wind board is not an independent director. All of these issues create a serious question as to the independent direction and leadership of Western Wind. Given all of these clear conflicts of interest, how can shareholders trust these directors to fairly represent their interests in a sale process, given past precedent?

  • Value Destroying Acquisition: On May 15, 2012, Western Wind announced a proposed acquisition of Champlin/GEI Wind Holdings. Despite repeated requests in public forums and in writing, Western Wind has been unwilling to provide any details of this proposed acquisition. What management has disclosed is that GEI owns a pipeline of unapproved renewable energy projects that lack power purchase agreements (PPAs). This transaction and the ensuing share issuance would result in a 13% dilution to existing shareholders. Given the very negative environment for new wind farm development in the United States, much of this pipeline may prove to be worthless. We will use all legal avenues available to us to block this dilutive and speculative transaction from occurring without shareholder approval.

  • A Failed Strategic Plan: The renewable energy industry conditions in North America and around the globe have become more challenging over the past year as the majority of tax and economic incentives for future wind and solar projects have been greatly curtailed. Thus, the economic value of any future pipeline of projects is now considered virtually worthless by the public markets and analysts covering the clean energy industry due to the real uncertainty of the viability of such projects. Without firm PPAs in hand, the financial viability of such projects must be greatly questioned. Despite the bleak outlook, Western Wind management has pursued the acquisition of GEI Wind and continues to spend millions of dollars of shareholder money pursuing projects with little realistic hope of them becoming economically viable.

  • Poor Financial Stewardship: Despite receiving over $87.3 million in cash from Investment Tax Credits over the past twelve months, the Company has continued to owe outstanding corporate bridge loans of over $20 million with interest rates that approach 25%. These loans remain on the Company's balance sheet even as Western Wind has paid out multi-million dollar bonuses to its Chief Executive Officer, Jeff Ciachurski, and spent millions of additional shareholder dollars chasing ill-advised and high risk development projects.

  • Misaligned Economic Interests: The CEO's economic incentives are not aligned with the interests of Western Wind shareholders. The value of shares owned by Jeff Ciachurski is less than the bonuses he has received for the completion of projects. Clearly, the CEO is incentivized to chase development deals and not to maximize shareholder value.

  • Woeful Share Price Performance: Western Wind's share price has fallen from $2.15 on January, 1 2012, to $1.33, based on the a 50-day average as at the close of trading on July 30, 2012, a drop of 38% in just under seven months. Western Wind's shares have woefully underperformed the TSX and the TSX small cap index in 2012. Over the past 50 days, Western Wind's common shares have traded at a discount of 76% to the net asset value of the Company's equity as determined by an independent valuation analysis done in 2011 by DAI Management Consultants. Further, over the past 50 days, the shares have traded at less than one half the value of a cash offer made for the Company in the autumn of 2011 by Algonquin Power.

Proxies for the Meeting will be solicited by or on behalf of Savitr pursuant to an information circular that will be prepared by Savitr, mailed to all shareholders and filed on SEDAR well in advance of the upcoming Meeting.

Savitr has retained Norton Rose Canada LLP as its legal counsel, and Kingsdale Shareholder Services as its proxy solicitation firm.

The Savitr Nominees

The Savitr Nominees are Mr. C. Winston Bennett, Mr. Andrew Midler, Mr. George Smitherman, Mr. William R. Tharp and Ms. Laura Rita Theil. Each of these nominees is highly qualified and has a wealth of sustainable energy, investing, capital markets and public company governance experience.

Biographies of the director nominees are included below.

C. Winston Bennett

Mr. Winston Bennett is presently Director, Corporate Finance at Javelin Partners Inc., a boutique merchant banking and transaction advisory firm. In addition, he is a director and principal shareholder of Helios Energy Inc., a developer of utility-scale solar energy facilities in Canada. In this capacity, he has overseen the sale of 35 MW of solar projects that were constructed at a total capital cost of approximately $200 million. Prior to joining Helios, Mr. Bennett was a Vice President of Investment Banking at Cormark Securities (formerly Sprott Securities), one of Canada's leading independent investment dealers. At Cormark, Mr. Bennett originated, structured and executed a broad variety of mandates including equity offerings, debt financings and M&A. Mr. Bennett currently serves as a Director and Chairman of the Audit Committee for Reservoir Capital Corp. A graduate of the Richard Ivey School of Business at the University of Western Ontario, Mr. Bennett is also a CFA charterholder and holds the ICD.D designation from the Institute of Corporate Directors.

Andrew R. Midler

Mr. Andrew Midler founded Savitr Capital in 2008 to focus on the management of equity strategies in the clean and renewable energy sector. Previously, Mr. Midler founded Standard Pacific in 1995. The investment management firm launched with $75 million of assets and grew to $5 billion and a team of 70 people by 2005. Mr. Midler managed the Global Long/Short Equity Strategy until 2005, Standard Pacific's flagship fund. He also supervised the firm's Credit Opportunities and Japan Long/Short Equity strategies. He remained the firm's CIO and CEO until December 2007. Prior to founding Standard Pacific, he served as the director of equity portfolio management at CS First Boston, then a $20 billion global institutional money management firm. Previously, he managed a significant portion of a $2.5 billion global hedge fund at Odyssey Partners. From 1986 through 1993, he worked at Fidelity Investments and his tenure included assignments as portfolio manager of Fidelity Convertible Securities Fund, Fidelity Equity Income II Fund, and Fidelity Growth & Income Fund. He holds an MBA from Harvard Business School and MA and BA degrees in Political Science from Stanford University.

George Smitherman

Mr. George Smitherman most recently ran for Mayor of Toronto, after an 11-year career as a senior cabinet minister and Member of Provincial Parliament for the riding of Toronto Centre, in the province of Ontario, Canada. Mr. Smitherman also served as Ontario's Deputy Premier, a role that often saw him as the government's leading spokesperson on many of the most contentious issues facing the province. In 2008, Mr. Smitherman was appointed Minister of Energy and Infrastructure by Premier Dalton McGuinty, where he shepherded the passage of Ontario's Green Energy and Green Economy Act, internationally recognized as the leading piece of renewable energy legislation in North America, and directly responsible for billions of dollars in new investment and thousands of green energy jobs in the province. In recognition for his leadership on the file, George received the World Wind Energy Award in 2009.

Prior to this, Mr. Smitherman served as one of Ontario's longest serving Ministers of Health and Long-Term Care, holding the portfolio from 2003-2008. He was first elected to the Ontario Legislature in 1999. Post politics, Mr. Smitherman has returned to his entrepreneurial roots founding G&G Global Solutions and three related business. G&G Global Solutions is focused on global trade and investment in energy, water and infrastructure sectors with offices in Toronto, Canada and Dhaka, Bangladesh as well as representation in Riyadh, Saudi Arabia and Seoul, Korea.

William (Bill) R. Tharp

Mr. Bill Tharp is currently the CEO and Director of Climate Change Infrastructure, a private holding company and leading financial solution provider focused on the low-carbon, water constrained, alternative energy and efficiency marketplace. Founded in 1993, Climate Change Infrastructure has successfully launched and managed nine cleantech / renewable power funds (VC & Project Equity), advised leading global institutions on active transactions and built and sold companies in this industry.

Mr. Tharp has over 10 years of experience in merchant banking in both Canada and the United Kingdom, and almost 20 years as an entrepreneur working exclusively within the climate change infrastructure marketplace. Prior to founding Climate Change Infrastructure, Mr. Tharp founded three businesses and successfully sold two, one where the assets were sold to a major Canadian Bank. Mr. Tharp sits on the boards of Climate Change Infrastructure, Quantum Leap, Tangerine Tango (Canada & Singapore) and Indian Investments Limited (Alberta). Mr. Tharp has a B.A. (Economics) from the University of British Columbia.

Laura Rita Theil

Ms. Rita Theil, BSS, LLB, MBA is a Self Employed Entrepreneur and Lawyer. Ms. Theil is a Founder and Owner and has been Chief Executive Officer of JacKryn France Inc. since 2004. She has advised governments, businesses, and investors on privatizations in electricity, water, and gas. She has over 17 years of experience advising global utilities companies. She served as a Director of European Utilities at Schroder Salomon Smith Barney from 1999 to 2003 and was responsible for the coverage of U.K. electric and water utilities. She serves as Director of GWR Global Water Resources Corp. Ms. Theil serves as a Non-executive Board Director of CQ Search Inc. She has been Director of Global Water Resources, Inc., since December 2010. She served as Independent Director of Sierra Geothermal Power Corp. from April 10, 2007 to 2010; and Scottish Water PLC from 2000 to 2009. She served as an Assistant Director of Dresdner Kleinwort Benson (now DrKW) in both London, England and New York from 1994 to 1999 where she was part of the electricity privatization team. In 2006, she was winner of Chamber of Commerce's New Business Venture of the Year award. In 2001, Commodities Now Magazine named Ms. Theil one of the top 50 key women in energy for vision. She is a Chartered Director (C. Dir.) designated by The Directors College. She holds a Masters of Business Administration obtained in 1990, a Bachelor of Law obtained in 1990 and a Bachelor of Social Sciences from the University of Ottawa obtained in 1986.

Additional Disclosure

Except as set out below, none of the Savitr Nominees is currently, or has been within the past ten years, (i) a director, chief executive officer or chief financial officer of any company that (a) was subject to an order that was issued while such person was acting in the capacity as director, chief executive officer or chief financial officer, or (b) was subject to an order that was issued after such person ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while such person was acting as a director, chief executive officer or chief financial officer, or (ii) a director or executive officer of any company that, while such person was acting in such capacity, or within a year of such person ceasing to act in such capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.

Mr. Midler was a member of the board of managers of Galveston Bay Biodiesel LLP, a Galveston, Texas based bio-diesel refiner, within one year of that company's filing of a voluntary petition for Chapter 11 Bankruptcy in the U.S. Bankruptcy Court of the Southern District of Texas on May 10, 2010.

None of the Savitr Nominees has within the past ten years become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of such person. For the purposes of section (i) above, the term "order" means a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, which was in effect for a period of more than 30 consecutive days.

None of the Savitr Nominees has been subject to (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable security holder in deciding whether to vote for such person.

Savitr will bear all costs and expenses associated with the solicitation of votes in favour of the Savitr Nominees once such solicitation begins. It is expected that the solicitation will be made primarily by mail, but proxies may also be solicited personally or by telephone. To assist with such process, Savitr has retained Kingsdale for a fee of up to $100,000 for its services, plus disbursements on the successful completion of the mandate. Savitr will pay for the costs associated with the solicitation of proxies in connection with the Meeting. Once shareholders have given a proxy in respect of the Meeting, they may subsequently revoke such proxy in any manner permitted by law.

The address of Western Wind is Suite 1326 - 885 West Georgia Street, Box 1041, HSBC Building, Vancouver, British Columbia, V6C 3E8.

Forward-Looking Statements

Certain statements in this press release contain forward-looking information within the meaning of applicable securities laws in Canada ("forward-looking information"). The words "anticipates", "believes", "budgets", "could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "schedule", "should", "will", "would" and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. The forward-looking information in this press release includes, but is not limited to: the nomination and election of the Savitr Nominees and replacement of Western Wind's current Directors; the timing and holding of the Western Wind's meeting; and the future prospects of Western Wind.

In connection with the forward-looking information contained in this news release, Savitr has made numerous assumptions. While Savitr considers these assumptions to be reasonable, these assumptions are inherently subject to significant uncertainties and contingencies. Additionally, there are known and unknown risk factors which could cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information contained herein. Known risk factors include, among others, that the Savitr Nominees may not be elected to the board of Western Wind. All forward-looking information in this press release is qualified in its entirety by this cautionary statement and, except as may be required by law, Savitr undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise after the date hereof.

Contact Information

  • Savitr Capital, LLC