Consortium will acquire 100% of the outstanding ordinary shares in Windlab by way of a Scheme of Arrangement.

Windlab shareholders would receive cash consideration of $1.00 per Windlab share.

Dont mind holding if it falls through as still reasonable value in my approximation although I will likely lower my exposure. Gap widening to 15% exaggerates the risk of failure in my opinion.

Feel it will likely suceed as aquirer already has an 18% stake already a ton of cash and a mandate to invest in renewables.

Indicative proposal by federation asset managment (not unexpected see interesting developments straw) for 100% of windlab at $1.00. 

If its sucessfull I think that shareholders will miss out on a lot of value to be realised over the next few years... oh well. 

Just want to roughly outline why I think WND looks undervalued

Windlab east Africa

-  Recent 10m investment for 25% equity (Est value 40 mil)

- So 37.5 mil if cash + equity taken into account

Windlab recurring revenue

FY 20 =  5 – 12 mil

Assume 1x ARR

Lets take the bottom end so 5 mil

Cash… 4.5mil plus ~4mil expected from greenwich + financial close of Lakeland expected next year so lets conservatively say… 5mil net cash (

Normalised NPAT for 2017/18 ~ 2.9 mil

Including FY19 likely to be ~ 0.6mil And after FY 20 significantly better than this due to lumpy inflows frim Greenwich and Lakeland closes

Note: Company stated cash burn rate without any development revenue within the range of discretionary development spending once KEP is operating. (To me this represents pretty significant inflection point allowing significant reinvestment of cashflows from development projects)

Wind lab developments south Africa = assigned 0 value

Total value if sold off 47.5mil (note I feel this is conservative)

Estimated normalised P/E at 50mil ~ 25 (for FY20)

Current market cap 47 mil (24/12/19)

Potential catalysts for unlocking more value - african projects / M & A activities / resolution of KEP dispute / financial close of lakeland / further asset managment wins now past breakeven operating costs  (assuming KEP generating)

Can see should be limited downside from here with significant upside if only a few things go right.

Kennedy energy park update on the 12/11/2019 provided some information on the ongoing delays and issues with registration as a generator. Delays are expected to extend until March or April next year. They are blaming the contractor and are in a financial armwrestle with them over payments for this delay.

Thoughts

-  Whilst annoying, this should be a temporary issue

- One major possible catalyst for a re-rate of WND is the big Kennedy project (KEPs big brother at the same site) unfortunently all these issues with the KEP make this seem further away from eventuating and potentially less likely?

- An issue to consider with future developments WND undertake

Latest update here

Innovation capital sell 12,574,544 shares (18.43% of WND) at $0.80 per share to federation asset managment on 24/9/19.

Interestingly the agreement is worded that if a takeover occurs before april next year federation asset managment must additionally pay a further half the difference in takeover price and the $0.80 they paid. (I haven't seen is before but maybe its not uncommon for such large share transfers).

Thoughts:

- Could this deal lead to a furture capital partner for WND leading to further project developments and a synergistic relationship?

- Is there M&A activity on the near horizon?

The momentum is pretty terrible currently might avoid some pain and wait for it to improve before building a proper position (26/06/19)

Step 1 develop wind farm site
Step 2 Sell site for profit + retain equity for recurring revenue
Repeat until cashflow positive

High risk - Probable cap raise in future