China Hydroelectric Corporation Announces Receipt of Non-Binding Proposal to
Acquire the Company at $2.97 per American Depositary Share
BEIJING, Sept. 4, 2013
BEIJING, Sept. 4, 2013 /PRNewswire/-- China Hydroelectric Corporation (NYSE:
CHC, CHCWS) ("China Hydroelectric" or the "Company"), an owner, developer and
operator of small hydroelectric power projects in the People's Republic of
China ("PRC"), today announced that its Board of Directors has received a
preliminary non-binding proposal letter, dated September 4, 2013, from
NewQuest Capital Partners, through its affiliated entity, CPI Ballpark
Investments Ltd, and on behalf of its affiliates and the funds managed by it
(collectively, "NewQuest"). According to the proposal letter, NewQuest is
interested in acquiring all of the Company's outstanding ordinary shares,
including ordinary shares represented by the Company's American depositary
shares or "ADSs" (each representing three ordinary shares of the Company), at
a price of $0.99 in cash per ordinary share or $2.97 in cash per ADS.
NewQuest currently owns 80,777,569 ordinary shares of the Company,
representing approximately 49.83% of the total outstanding ordinary shares of
the Company. In addition, as further disclosed in its beneficial ownership
report on Schedule 13D filed with the SEC on September 4, 2013, NewQuest also
holds options and warrants to acquire ordinary shares of the Company, which,
if exercised in full, would increase its ownership of the Company to
approximately 56.8% of the Company's outstanding ordinary shares.
NewQuest's proposal letter specifies that its proposal constitutes only a
preliminary indication of its interest, and is subject to negotiation and
execution of definitive agreements relating to the proposed transaction. A
copy of the proposal letter is attached hereto as Exhibit A.
The Company's Board of Directors, other than the Chairman of the Board of
Directors, Mr. Amit Gupta, who is also a partner of NewQuest, is reviewing and
evaluating NewQuest's proposal and cautions the Company's shareholders and
others considering trading in its securities that the Board of Directors has
just received the proposal letter and has not made any decisions with respect
to the Company's response to the proposal. There can be no assurance that any
definitive offer will be made by NewQuest or any other person, that any
definitive agreement will be executed relating to the proposed transaction, or
that the proposed transaction or any other transaction will be approved or
About China Hydroelectric Corporation
China Hydroelectric Corporation (NYSE: CHC, CHCWS) ("China Hydroelectric" or
"the Company") is an owner, developer and operator of small hydroelectric
power projects in China. Through its geographically diverse portfolio of
operating assets, the Company generates and sells electric power to local
power grids. The Company's primary business is to identify, evaluate, acquire,
develop, construct and finance hydroelectric power projects. The Company
currently owns 25 operating hydropower stations in China with total installed
capacity of 517.8 MW, of which it acquired 21 operating stations and
constructed four. These hydroelectric power projects are located in four
provinces: Zhejiang, Fujian, Yunnan and Sichuan. Hydropower is an important
factor in meeting China's electric power needs, accounting for approximately
22% of total nation-wide capacity.
Cautionary Statement concerning Forward Looking Statements
This news release may include certain statements that are not descriptions of
historical facts, but are forward-looking statements. These forward-looking
statements can be identified by terminology such as "will," "expects,"
"anticipates," "future," "intends," "plans," "believes," "estimates" and
similar statements. Forward-looking statements involve risks, uncertainties
and other factors that could cause actual results to differ materially from
those contained in any such statements. Potential risks and uncertainties
include, but are not limited to, risks discussed in China Hydroelectric's
filings with the U.S. Securities and Exchange Commission. China Hydroelectric
does not undertake any obligation to update any forward-looking statement,
except as required under applicable law.
For further information about China Hydroelectric, please visit the Company's
website at http://www.chinahydroelectric.com.
For more information, please contact:
China Hydroelectric Corporation
Scott Powell James Hull
Investor Relations and Corporate Financial Analyst
Communications Phone (China): +86-10-6408-2341
Phone (U.S.): +1-646-650-1351 Email: email@example.com
Gary Dvorchak, CFA
Senior Vice President
Phone (China): +86-10-6583-7500
Phone (U.S.): +1 (310) 954-1123
September 4, 2013
The Board of Directors
China Hydroelectric Corporation
2105A, Ping'an International Financial Center,
No. 3 South Xinyuan Street
Chaoyang District, Beijing, 100027
People's Republic of China
Dear Sirs / Madam:
NewQuest Capital Partners, through its affiliated entity, CPI Ballpark
Investments Ltd. ("CPI Ballpark"), and on behalf of its affiliates and the
funds managed by it (together, "NewQuest"), are pleased to submit this
preliminary non-binding proposal to acquire all of the outstanding ordinary
shares of China Hydroelectric Corporation (the "Company") not already owned by
CPI Ballpark in a going private transaction (the "Acquisition") as described
below. Currently, NewQuest beneficially owns 80,777,569 ordinary shares of
the Company, which include 3,371,502 American Depositary Shares of the Company
("ADSs," with each ADS representing three ordinary shares of the Company) and
70,663,063 ordinary shares of the Company, representing 49.83% of the total
outstanding ordinary shares of the Company based on the total number of
outstanding ordinary shares as of June 30, 2013 (as reported by the Company on
Form 6-K dated August 15, 2013).
We believe that our proposal of US$2.97 in cash per ADS, or US$0.99 in cash
per ordinary share of the Company, provides a very attractive opportunity to
the Company's shareholders to realize superior value, and we are confident
that we can successfully close the Acquisition as outlined below.
Our proposal represents a premium of 33.2% over the closing price of the ADSs
on September 3, 2013 and a premium of 35.8% over the volume-weighted average
closing price of the ADSs during the last 30 trading days.
The terms and conditions upon which we are prepared to pursue the Acquisition
are set forth below:
1. Sponsor. NewQuest will be the sole sponsor for the Acquisition. In
addition to 80,777,569 ordinary shares of the Company beneficially owned by
NewQuest, NewQuest also has the option to acquire (i) 6,959,893 ordinary
shares of the Company pursuant to an option agreement between CPI Ballpark and
Vicis Capital Master Fund, and (ii) 10,004,157 ordinary shares of the Company
pursuant to a warrant issued by the Company. Please refer to our Schedule 13D
for the terms of our options and warrant.
2. Purchase Price. The consideration payable in the Acquisition will be
US$2.97 in cash for each ADS and US$0.99 in cash per ordinary share of the
Company, in each case other than the ADSs or ordinary shares held by CPI
Ballpark or that may be rolled over by other shareholders in connection with
3. Closing Certainty and Funding. Given our shareholding and familiarity with
the Company, we believe that we are able to offer a high degree of closing
certainty and that we are well positioned to negotiate and complete the
Acquisition on an expedited basis. We intend to finance the Acquisition with
a combination of capital from our fund and additional financing to be
finalized with our financing partners. We expect definitive commitments for
any additional financing to be in place when the Definitive Agreements (as
defined below) are signed.
4. Due Diligence. As an existing shareholder, we believe that we will be in a
position to complete our due diligence for the Acquisition on an expedited
basis and in parallel with the parties' negotiation of the Definitive
5. Definitive Agreements. We are prepared to promptly negotiate and finalize
mutually satisfactory definitive agreements with respect to the Acquisition
(the "Definitive Agreements"). The Definitive Agreements will provide for
representations, warranties, covenants and conditions that are typical,
customary and appropriate for transactions of this type.
6. Process. We believe it is prudent and in the best interests of the Company
for the Company's Board of Directors to establish a special committee of
independent directors to consider the Acquisition.
In considering our offer, you should be aware that we are interested only in
acquiring the outstanding ordinary shares of the Company that CPI Ballpark
does not already beneficially own and which are not expected to be rolled over
in connection with the Acquisition, and that we do not currently have any
intention to sell our stake in the Company to a third party.
7. About NewQuest. NewQuest was established in 2011 from the spin out of Bank
of America Merrill Lynch's Asian Private Equity team. NewQuest has extensive
experience in sourcing, executing, managing, and divesting private equity and
special situation stakes across Asia. NewQuest, through CPI Ballpark, has
been a key shareholder of the Company since January 2008, and we believe we
are in a unique position to offer superior value to the Company's
8. Advisor. NewQuest has engaged Weil, Gotshal & Manages LLP as its legal
counsel in connection with the Acquisition.
9. Public Disclosure. This letter will be promptly filed and disclosed to the
public in accordance with applicable securities regulations.
10. No Binding Commitment. This letter constitutes only a preliminary
indication of our interest, and does not constitute an offer capable of
acceptance or any binding commitment with respect to the Acquisition. A
binding commitment will result only from the execution of Definitive
Agreements, and then will be on the terms and conditions provided therein.
We are very excited about the Acquisition and hope that you are interested in
proceeding in a manner consistent with our proposal. We believe that we are
uniquely positioned to provide a compelling opportunity for the shareholders
of the Company on a highly expedited timeframe. Should you have any questions
concerning this letter, please feel free to contact us at any time.
We look forward to hearing from you.
Very truly yours,
CPI Ballpark Investments Ltd.
/s/ Georges A Robert_____
Name: Georges A Robert
SOURCE China Hydroelectric Corporation
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