Trading Emissions and Leaf Clean Energy merger collapses after New York Hedge Fund U-Turn

The proposed merger of Trading Emissions (AIM: TRE) and Leaf Clean Energy (AIM: LEAF) has fallen through following a vote at Trading Emissions’ shareholder meeting earlier today. Although a 63% majority voted in favour of the merger the proposal failed to reach the 75% mark, a condition of the merger. The company said the failed vote was the result of one major shareholder withdrawing its previous support for the deal.

On the 11 February New York based hedge fund, Moore Capital Management LP, informed the respective companies that it no longer intended to vote in-favour of the merger. The hedge-fund, which is managed by American billionaire Louis Bacon, owns 41.2m Trading Emissions shares and represents approximately 16% of the company’s voting rights.

Despite the disappointment, the respective companies have both remarked on the confidence in their own ability to proceed with their stated strategies independently. Trading Emissions noted that whilst the merger would have enabled them to quickly enter North American markets, it now aims to build a truly global carbon focussed business, targeting investments in the US as well as Europe and Asia.

Leaf Clean said it intends to actively manage its investments to maximise capital and income returns for shareholders. As such the North American clean-tech investor plans a share-buyback scheme to boost its flagging share price. According to Leaf Clean Energy its equity is the deeply discounted compared to net asset value.

The company plans to buy-back up to US$27 million at a maximum price of 65p, which would represent 14.6% of the issued share capital. Furthermore, Leaf Clean Energy said its directors will keep the situation under review and will consider a further buyback programme of up to US$20m, subject to asset realisations and general market conditions. Leaf Clean noted that it is prevented from undertaking the buy-back until it has secured shareholder approval and it has exited its closed period ahead of March’s interim results.

Trading Emission also plans to return cash to investors, and has recommended an interim dividend of 1.65 pence per share, representing a 10% increase on last year. The dividend, totalling £4.25m will be paid on 31st March 2010.

http://www.proactiveinvestors.co.uk/companies/news/13546/trading-emissions-and-leaf-clean-energy-merger-collapses-after-new-york-hedge-fund-u-turn-13546.html