EcoSecurities Response Circular
(Thomson Reuters ONE) - 4 August 2009FOR IMMEDIATE RELEASENOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART,IN, INTO OR FROM AUSTRALIA, CANADA, SOUTH AFRICA OR JAPAN OR ANYOTHER JURISDICTION IF TO DO SO WOULD CONSTITUTE A VIOLATION OF THERELEVANT LAWS OF SUCH JURISDICTION EcoSecurities Group plc Posting of response circular recommending that EcoSecurities Shareholders reject the Guanabara OfferThe Board of EcoSecurities has today written to EcoSecuritiesShareholders advising them why the Board considers that the offer of77 pence per Ordinary Share made by Guanabara Holdings B.V. on 22July 2009 undervalues the Company and its prospects and why itrecommends that all EcoSecurities Shareholders reject the GuanabaraOffer.The response circular posted today to EcoSecurities Shareholders setsout the EcoSecurities Board's reasons for rejecting the GuanabaraOffer and in particular highlights that the Offer: * Represents a discount of 14 per cent. to the current EcoSecurities share price1 * Values EcoSecurities at only 37 pence per Ordinary Share excluding net cash2 * Seeks to exploit the low share price * Fails to recognise that EcoSecurities has just announced a maiden profit before tax for the first half of 20093 * Fails to recognise significant revenue growth and increased CER issuance levels * Fails to recognise EcoSecurities' significant potential for future growth as global carbon markets develop, particularly given recent legislative developments in the United StatesEcoSecurities Shareholders representing 19.9 per cent. of the issuedshare capital of EcoSecurities have irrevocably undertaken to rejectthe Guanabara Offer already.The Board of EcoSecurities believes the EcoSecurities business, itsmarket position and the experience and industry expertise of itspeople make it well prepared to meet the uncertainties and riskshighlighted by Guanabara in the Offer Document.The Board of EcoSecurities recommends that EcoSecurities Shareholdersreject the Guanabara Offer.Commenting on the Offer, Mark Nicholls, Chairman of EcoSecurities,said:"The Board considers this offer to be wholly inadequate and this isreinforced by the Interim Results that the Company announced thismorning. The Board of EcoSecurities remains fully committed todelivering shareholder value to all its shareholders and thereforestrongly urges shareholders to reject the Guanabara Offer."Notes1 Based on the closing price of the Ordinary Shares of 89.5 pence asat 3 August 2009, being the last dealing day prior to the date ofthis announcement2 Based on the Group's net cash balance of ?55.3 million at 30 June2009 and the 118,181,352 Ordinary Shares in issue as at 3 August 2009and which is equivalent to ?0.47 per share (approximately 40 penceper share based on the Euro/Sterling exchange rate quoted on theFinancial Times website (www.ft.com) on 3 August 2009 of 1.17450)3 Based on the Group's reported profit before income tax of ?1.058million for the six months ended 30 June 2009This announcement should be read in conjunction with, and is subjectto, the appendices to the announcement. Appendix I contains detailsof the bases and sources of information contained in thisannouncement. Appendix II contains definitions of certain expressionsused in this announcement and Appendix III contains the glossary ofthe technical terms used in this announcement.EnquiriesFor further information please contact:EcoSecurities Group +353 1 613 9814plcBruce Usher, CEOAdrian Fernando, COOJames Thompson, CFORBS Hoare Govett +44 20 7678 8000LimitedJustin Jones / Hugo FisherCitigate Dewe Rogerson +44 20 7638 9571Ged Brumby / Tom BaldockGeneralEcoSecurities Shareholders should read the response circular postedtoday to EcoSecurities Shareholders in full as it contains importantinformation relating to the Company and the views of the Board on theGuanabara Offer.Director's Responsibility StatementsThe directors of the Company accept responsibility for theinformation contained in this announcement. To the best of theknowledge and belief of the directors of the Company (who have takenall reasonable care to ensure that such is the case), the informationcontained in this announcement is in accordance with the facts anddoes not omit anything likely to affect the import of suchinformation.Material ChangeOther than as set out in this announcement, the Directors are notaware of any material change in the information previously publishedby the Company, or on its behalf, and in particular there has been nomaterial change in the information specified in Rule 27.1 of theTakeover Rules.Financial AdvisersRBS Hoare Govett, which is authorised and regulated in the UnitedKingdom by the Financial Services Authority, is acting exclusivelyfor EcoSecurities and no one else in connection with this matter andwill not be responsible to anyone other than EcoSecurities forproviding the protections afforded to clients of RBS Hoare Govett norfor providing advice in relation to this matter, the content of thisannouncement or any matter referred to herein.Overseas ShareholdersThe release, publication or distribution of this announcement incertain jurisdictions may be restricted by law and therefore anypersons who are subject to the laws and regulations of anyjurisdiction other than Ireland or the UK or EcoSecuritiesShareholders who are not resident in Ireland or the UK should informthemselves about, and observe, any such restrictions. Any failure tocomply with these restrictions may constitute a violation of thesecurities laws of any such jurisdiction. This announcement does notconstitute or form part of any offer to sell, or the solicitation ofan offer to buy or subscribe for, shares in the Company to any personin any jurisdiction.Rule 8.3 - Dealing Disclosure RequirementsUnder the provisions of Rule 8.3 of the Takeover Rules, if any person(other than a "recognised intermediary") is or becomes "interested"(directly or indirectly) in 1 per cent. or more of any class of"relevant securities" of the Company, all "dealings" in any "relevantsecurities" of the Company (including by means of an option inrespect of, or a derivative referenced to, any such class of"relevant securities") must be publicly disclosed in accordance withRule 2.9 of the Takeover Rules, including the details set out in Rule8.6 of the Takeover Rules, by no later than 3.30pm (London time) onthe London business day following the date of the relevanttransaction. This requirement will continue until the date on whichthe offer becomes, or is declared, unconditional as to acceptances,lapses or is otherwise withdrawn or on which the "offer period"otherwise ends. If two or more persons "act in concert", to acquirean "interest" in "relevant securities" of the Company, they will bedeemed to be a single person for the purpose of Rule 8.3.Under the provisions of Rule 8.1 of the Takeover Rules, all"dealings" in "relevant securities" of the Company by the offeror orthe Company, or by any of their respective "associates", must bedisclosed by no later than 12.00 noon (London) on the London businessday following the date of the relevant transaction.A disclosure table, giving details of the companies in whose"relevant securities" "dealings" should be disclosed, can be found onthe Irish Takeover Panel's website at www.irishtakeoverpanel.ie. TheIrish Takeover Panel also provides an appropriate form for anydisclosures under Takeover Rules 8.1 or 8.3.'Interests in securities' arise, in summary, when a person has longeconomic exposure, whether conditional or absolute, to changes in theprice of securities. In particular, a person will be treatedas having an 'interest' by virtue of the ownership or control ofsecurities, or by virtue of any option in respect of, or derivativereferenced to, securities.Terms in quotation marks are defined in the Takeover Rules, which canalso be found on the Irish Takeover Panel's website. If you are inany doubt as to whether or not you are required to make a disclosureunder Rule 8, you should consult the Irish Takeover Panel.Profit ForecastThe Interim Results constitute a profit estimate for the purposes ofRule 28.6 of the Takeover Rules (the "profit estimate") and have beenreported on by KPMG and RBS Hoare Govett (the Company's financialadviser in relation to the Offer) in accordance with Rule 28.3(a) ofthe Takeover Rules. The full text of the reports from KPMG and RBSHoare Govett is set out in the Company's announcement in respect ofthe Interim Results which was made earlier today and will be includedin the response circular posted today to EcoSecurities Shareholders.The directors of the Company confirm that the profit estimate remainsvalid and that KPMG and RBS Hoare Govett have indicated that theyhave no objection to their reports continuing to apply.The following information is the text of the 'Letter from theChairman' contained in Part 1 of the response circular posted todayto EcoSecurities Shareholders. Copies of the response circular may beobtained upon request from the Company Secretary, EcoSecurities GroupPlc, 40 Dawson Street, Dublin 2, Ireland and will also be availablefor download from www.ecosecurities.com. References to 'thisdocument' therefore refer to the response circular posted today toEcoSecurities Shareholders."Dear Company Shareholder REJECT THE GUANABARA OFFER OF 77 PENCEIntroductionThis letter sets out the reasons why the Board, which has been soadvised by RBS Hoare Govett, considers that the Guanabara Offerundervalues the Company and its prospects and why it recommends thatall Company Shareholders reject the Guanabara Offer.BackgroundOn 5 June 2009, Guanabara announced that it was considering making anoffer for the entire issued and to be issued share capital of theCompany at a price of 60 pence per Ordinary Share.Subsequently, on 8 June 2009, EDF Trading announced that it was alsoconsidering making a cash offer for the entire issued and to beissued share capital of the Company at a price of at least 75 penceper Ordinary Share with the ultimate level of any offer dependent onthe satisfactory completion of due diligence.The Board rejected both unsolicited approaches as being whollyinadequate and noted that it had recently received and rejected anindicative conditional proposal of 96 pence per Ordinary Share incash from EDF Trading.Following their announcement on 8 June 2009, representatives of theBoard held discussions with EDF Trading regarding their interest inthe Company. No proposal from EDF Trading was forthcoming from thesediscussions. On 16 July 2009, EDF Trading announced that it did notintend to progress its possible offer for the Company and had enteredinto a conditional purchase agreement with Guanabara to purchase partof the Group's portfolio in the event that Guanabara completed asuccessful offer for the Company.Later on 16 July 2009, Guanabara announced its intention to make acash offer of 77 pence per Ordinary Share for the entire issued andto be issued share capital of the Company. As with the previousunsolicited indicative offer by EDF Trading around this level, theBoard rejected the Guanabara Offer as being wholly inadequate andnoted that neither the Company nor its advisers had had any contactwith Guanabara or its advisers.On 21 July 2009, Tricorona AB (publ) announced it was reviewing thesituation regarding the possibility of making an offer for theCompany.On 22 July 2009, Guanabara dispatched to you a document containingthe Guanabara Offer.Recent trading and prospectsToday, the Company announced its interim results for the six monthsended 30 June 2009. These results reported continuing improvedfinancial and operating results for the Group including: * Significantly improved financial performance underpinned by a successful forward sales strategy and management action on costs. * Increase in consolidated revenue to ?60.0 million for the first half of 2009, an increase of 348 per cent. over the same period last year. * Net revenue, including other income, of ?11.6 million for the first half of 2009 (?4.8 million for the first half of 2008). * Profit before income tax for the first half of 2009 of ?1.1 million (?10.0 million loss for the first half of 2008). * Issuance from the Group's portfolio was 820,000 CERs net to EcoSecurities during the first half of 2009 (595,000 CERs for the first half of 2008). * On a net basis to EcoSecurities at 30 June 2009, the pre-2012 CER portfolio's 158 registered projects were capable of producing 40 million CERs (127 projects and 35 million CERs at 31 December 2008), representing 40 per cent. (34 per cent. at 31 December 2008) of the Group's portfolio. * Control of administrative expenses has remained tight and expenditure for the first half of 2009 of ?11.3 million was 24 per cent. lower than the same period last year. * The policy of forward sales has resulted in contracted future revenues of ?380.6 million at 30 June 2009 with an associated Net Trading Margin of ?163.1 million. * The weighted average sale price of the forward sales was ?13.80 per CER and the weighted average acquisition price of the pre-2012 CER portfolio was ?8.02 per CER at 30 June 2009. * EcoSecurities continues to retain a strong consolidated net cash position which amounted to ?55.3 million at 30 June 2009. * CER issuances currently anticipated for 2009 remain in line with the Board's expectations.In the Interim Results, I commented as follows:"I am very pleased to report that for the six months ended 30 June2009, EcoSecurities achieved its first period of profitability. WithEcoSecurities' visibility of revenues provided by the forward salescontracts, its reduced cost base and strong balance sheet, the Groupis well positioned not only to progress successfully during thecurrent period of low CER prices and worldwide economic downturn butalso to take advantage of the potential recovery of CER prices in thelatter part of the first commitment period of the Kyoto Protocol. TheBoard of EcoSecurities remains fully committed to deliveringshareholder value to all its shareholders."The Board considers that the Interim Results for the six months ended30 June 2009 build on the strong financial and operational progressachieved by the Group, despite the effects of the economic recessionand continuing uncertainties around policies affecting the carbonmarkets.The full text of the Interim Results is set out in Part 2 of thisdocument, together with the reports issued in respect thereof by KPMGand RBS Hoare Govett pursuant to the Takeover Rules. Shareholders areurged to read the whole of Part 2 of this document.Why the Guanabara Offer undervalues the Company and should berejectedThe Board is focused on delivering shareholder value. For the reasonsset out below, the Board considers that the Guanabara Offer not onlyundervalues the Company but fails to recognise the value of theCompany's current portfolio together with the strong recent progressbeing made by the business and its potential. Accordingly, the Boardrecommends that all Company Shareholders reject the Guanabara Offer.Inadequate offer priceThe Board considers that the Guanabara Offer is opportunistic as toits timing and seeks to exploit the low price of the Ordinary Sharesprior to Guanabara's unsolicited announcement on 5 June 2009.The Board believes neither the Company's share price immediatelyprior to the above announcement nor the Guanabara Offer of 77 penceper Ordinary Share properly reflect the value of the currentEcoSecurities business, including its large and diversifiedportfolio, established operating platform, leading reputation in theglobal carbon markets and its future prospects as global carbonmarkets develop in the coming years.In holding this view of the underlying value in the Company, theBoard is pleased to note that research coverage published since thebeginning of the Offer Period supports the view that the GuanabaraOffer fails to recognise the value of the Company's business and itsfuture prospects.The Board notes that at the close of business on 3 August 2009, beingthe last dealing day prior to the date of this document, theGuanabara Offer of 77 pence represented a discount of 14 per cent. tothe Closing Price of 89.5 pence.Moreover, the Guanabara Offer represents only a 37 pence premium tothe Group's net cash balance per Ordinary Share at 30 June 2009,based upon the Group's net cash balance of ?55.3 million at that dateas announced today in the Interim Results.The Guanabara Offer of 77 pence is opportunistic, wholly inadequateand fails to recognise the value of the current EcoSecuritiesbusiness and its future prospects.Failure to recognise the Group's strong recent progressIn setting out its reasons for making the Guanabara Offer, Guanabaranotes "a time of great market volatility and economic uncertainty,particularly in the carbon markets", declining CER prices and the"combined effects of the economic recession, a general decline instock markets, and continuing uncertainties around the policiesaffecting carbon markets".The Board recognises the difficult trading conditions arising fromthe economic recession, together with the regulatory issues anddelays that have adversely affected the carbon markets, and believesthat these have adversely impacted the share price of the Company.However, the Board also believes the Group's business, its marketposition and the experience and industry expertise of its people makeit well prepared to meet these current challenges and is encouragedin this view by the recent strong progress in growing the business.As highlighted above, in the paragraph entitled "Recent trading andprospects", the Group has delivered in the first six months of 2009: * Its first reported period of profitability; * Significant consolidated revenue and net revenue growth; * Increased issuance levels of CERs; * Growth in registered projects; and * A strong net cash position of ?55.3 million at 30 June 2009, representing 40 pence per Ordinary Share.The Board is focused on delivering shareholder value and it believesthe Interim Results demonstrate progress in this regard and that thebusiness is well positioned for the future. This is not recognised bythe Guanabara Offer and so it should be rejected.EcoSecurities' significant potential for future growthThe Board believes that there are significant potential growth areasfor EcoSecurities arising from: * In December 2009, the parties to the UNFCCC plan to meet to advance a new international agreement to replace the Kyoto Protocol when it expires in 2012. EcoSecurities' CER portfolio post-2012 amounted to 125 million CERs at 30 June 2009 of which 95 per cent. did not have fixed price obligations. In expectation that a new international framework will generate demand for project based offsets, the Board expects EcoSecurities' post-2012 CER portfolio will deliver further value. * The impact of the American Clean Energy and Security Act (otherwise known as the Waxman Markey Bill) which was approved by the US House of Representatives on 26 June 2009. Since the US did not ratify the Kyoto Protocol, this is a significant step forward for the establishment of a cap and trade scheme for greenhouse gases in the US and, subject to its passage through the Senate, this would allow up to 2 billion tonnes of CO2e offset credits per year of which up to 1.5 billion tonnes CO2e per annum may be from international offset projects. This compares with the CDM market size of 1.6 billion tonnes CO2e expected from registered CDM projects to the end of 2012. * The Group's network of 29 offices in 26 countries, including its presence in the US for more than a decade. This provides a platform from which, in the Board's opinion, EcoSecurities will be well placed to take advantage of growth opportunities in the carbon sector arising out of the developing policy framework.Delisting would damage EcoSecurities' profileAt the time of its admission to trading on AIM, the Board believedthat the admission would raise the public profile of the Company andso increase its credibility with global customers, suppliers,partners and project developers.Some four years on, the Board still retains that view and considersthe intention of Guanabara to de-list the Company to be potentiallydamaging to the profile of the Company in its markets.For these reasons, the Board recommends that all Company Shareholdersreject the Guanabara Offer.Guanabara's future strategy for the CompanyThe Offer Document highlights the risks and uncertainties Guanabarabelieves the Company is facing. However, save for converting theCompany to a private company and ceasing to trade on AIM, Guanabaraprovides no clear insight as to how it would manage these risks oruncertainties. Given that Guanabara does not currently have abusiness in the carbon markets and has stated that it does not intendto significantly change the business of the Company or the locationof the Company's business, the Board considers it difficult to judgehow Guanabara will develop the Company's business. However, the Boardrecognises Guanabara's statement that, "Since its creation in 1997,the Company has continuously evolved to adapt to changes in thecarbon market" and the Board believes this is, and will continue tobe, the case where EcoSecurities remains a public company.The Board welcomes the confirmation by Guanabara that it willsafeguard the existing statutory employment rights of management andemployees of the Group should it complete its offer. However, theBoard also notes that Guanabara cannot rule out rationalisation andother appropriate measures, including possible redundancies, shouldGuanabara consider it necessary.Strong management team and industry expertiseThe Group has an experienced management team and a depth of industryexpertise that will enable it to build on the recent operational andfinancial progress.On 11 February 2009, Bruce Usher, Chief Executive Officer, announcedhis intention to step down as Chief Executive Officer when a suitablesuccessor has been appointed. Mr Usher, who is stepping down topursue personal interests, remains fully committed to the Company andintends to continue to sit on the Board as a non-executive directorof the Company after he has stepped down. The Board is activelyengaged in the search for a new Chief Executive Officer and Mr Usherwill continue in his current role until the appropriate candidate isappointed.Irrevocable undertakings to reject the Guanabara OfferThe Company has received irrevocable undertakings already from thefollowing Company Shareholders to reject the Guanabara Offer: * Mark Nicholls, Chairman of the Company, in respect of 20,000 Ordinary Shares, representing approximately 0.02 per cent. of the issued share capital of the Company. * Thomas Byrne, a Non-executive Director of the Company, in respect of 20,000 Ordinary Shares, representing approximately 0.02 per cent. of the issued share capital of the Company. * Bruce Usher, Chief Executive Officer of the Company, in respect of 3,356,000 Ordinary Shares, representing approximately 2.84 per cent. of the issued share capital of the Company. * Adrian Fernando, Chief Operating Officer of the Company, in respect of 100,000 Ordinary Shares, representing approximately 0.08 per cent. of the issued share capital of the Company. * Marc Stuart, director of new business development and a founder of the Company, in respect of 10,122,000 Ordinary Shares held by the Stuart Family Trust (of which Mr Stuart is a trustee), representing approximately 8.56 per cent. of the issued share capital of the Company. * Credit Suisse International, in respect of 9,918,621 Ordinary Shares, representing approximately 8.39 per cent. of the issued share capital of the Company.In aggregate, Company Shareholders holding 23,536,621 OrdinaryShares, representing 19.91 per cent. of the issued share capital ofthe Company, have irrevocably undertaken to reject the GuanabaraOffer already.Particulars of these irrevocable undertakings are set out inparagraph 2.8 of Appendix I to this document.Additional informationYour intention is drawn to the additional information contained inAppendices I, II, III and IV of this document.Action to be taken * Company Shareholders are strongly urged to reject the Guanabara Offer. * The way to reject the Guanabara Offer is to take no action. * Do not sign any document or form which Guanabara or its advisers have sent you.RecommendationThe Board, which has been so advised by RBS Hoare Govett, itsfinancial advisers, unanimously recommends that Company Shareholdersreject the Guanabara Offer and take no action in respect of theirshareholdings. In providing advice to the Board, RBS Hoare Govett hastaken into account the commercial assessment of the Board.The Directors will not be accepting the Guanabara Offer in respect oftheir own shareholdings of Ordinary Shares which comprise 3,496,000Ordinary Shares, representing 2.96 per cent. of the issued sharecapital of the Company.Yours faithfully,Mark NichollsChairman"Appendix I: Presentation of Information, Bases and SourcesA. FORWARD-LOOKING STATEMENTSThis announcement contains statements that are or may be"forward-looking" with respect to the financial condition, results oroperations and business of the Company. In some cases, theseforward-looking statements can be identified by the use offorward-looking terminology, including the terms "believes","estimates", "forecasts", "plans", "prepares", "anticipates","expects", "intends", "may", "will" or "should" or, in each case,their negative or variations or comparable terminology. Suchforward-looking statements involve known and unknown risks,uncertainties and other factors, which may cause the actual results,performance or achievements of the Company, or the industry in whichis operates, to be materially different from any future results,performance or achievements expressed or implied by suchforward-looking statements.B. PRESENTATION OF FINANCIAL AND OPERATING INFORMATIONUnless otherwise stated, the financial information concerning theCompany has been extracted from internal financial and managementinformation, the published annual reports and accounts of the Companyfor the relevant periods, the Interim Results and other informationmade publicly available by the Company. Financial information isreported under Irish GAAP unless otherwise stated.C. THIRD PARTY SOURCESThe Company confirms that the information in this announcementobtained from third party sources has been correctly and fairlyreproduced. So far as the Company is aware and has been able toascertain from information published by such third parties, no factshave been omitted which would render the reproduced informationinaccurate or misleading.The Company does not have access to the facts and assumptionsunderlying the data extracted from publicly available sources. As aresult, the Company is unable to verify such.D. SOURCES AND BASESUnless otherwise stated, information regarding Guanabara's Offer issourced from the Offer Document and other material made publiclyavailable by Guanabara or any other person mentioned in the OfferDocument.E. REFERENCESThe relevant bases of calculation and source of information areprovided below in the order in which the relevant information appearsin this announcement. Where financial or operating information isbased on the underlying sources and bases described in paragraph B,the underlying sources and bases are not repeated again. Whereinformation is repeated in this announcement, the underlying basesand sources are generally cited once and not repeated again.The reference to the current Company share price is based on theclosing price of the Ordinary Shares of 89.5 pence as at 3 August2009, being the last dealing day prior to the date of thisannouncement.The reference to the Guanbara Offer valuing the Company at 37 penceper Ordinary Share excluding net cash is based on the Group's netcash balance of ?55,300,000 at 30 June 2009 as recorded in theInterim Results and 118,181,352 Ordinary Shares in issue as at theLatest Practicable Date, which is equivalent to ?0.47 per share(approximately 40 pence per share based on the Euro/Sterling exchangerate quoted on the Financial Times website (www.ft.com) on 3 August2009 of 1.17450). The offer price of 77 pence per Ordinary Share less40 pence equals 37 pence per Ordinary Share.The reference to the low share price is based on the discrepancybetween the average share price of theCompany since its admission to trading on AIM, being 160.4 pence, andthe share price immediately prior to commencement of the OfferPeriod, being 45.5 pence.The references to the profit before tax in the first half of 2009,significant revenue growth and increased CER issuance levels arebased on the Interim Results.The reference to the recent legislative developments in the UnitedStates is based on the approval by the US House of Representatives ofthe American Clean Energy and Security Act on 26 June 2009.The reference to Company Shareholders representing 19.91 per cent. ofthe issued share capital havingundertaken to reject the Guanabara Offer is based on the irrevocableundertakings received by the Company from such Company Shareholders.The reference to the Company's market position is based on theindependent market research report byVerdantix of December 2008 and the industry awards referred to below.The reference to the experience and industry expertise of theCompany's people is based on internal management information.The reference to Guanabara announcing that it was considering makingan offer for the entire issued share capital of the Company at aprice of 60 pence per Ordinary Share is sourced from the announcementmade by Guanabara on 5 June 2009 entitled 'Guanabara - Rule 2.4Announcement'.The reference to EDF Trading announcing that it was also consideringmaking a cash offer for the entire issued share capital of theCompany at a price of at least 75 pence per Ordinary Share is sourcedfrom the announcement made by EDF Trading on 8 June 2009 entitled'EDF Trading - Rule 2.4 Announcement'.The reference to the Board rejecting both unsolicited approaches asbeing wholly inadequate and noting that the Board had recentlyreceived and rejected an indicative conditional proposal of 96 penceper Ordinary Share in cash from EDF Trading is sourced from theannouncements made by EcoSecurities on 5 June 2009 entitled'EcoSecurities Response to Possible Offer made by EDF Trading' and on8 June 2009 entitled 'EcoSecurities Response to Possible Offer madeby Guanabara'.The reference to EDF Trading announcing that it did not intend toprogress its possible offer and had entered into a conditionalpurchase agreement with Guanabara is sourced from the announcementsmade by EDF Trading on 16 July 2009 entitled 'EDF Trading - StatementRe Possible Offer for EcoSecurities' and 'EDF Trading - PortfolioPurchase Agreement with Guanabara in relation to EcoSecurities'.The reference to the Board rejecting the Guanabara Offer is sourcedfrom the announcement made byEcoSecurities on 16 July 2009 entitled 'EcoSecurities - IntendedOffer From Guanabara, Withdrawal of Possible Offer from EDF andPortfolio Purchase Agreement'.The reference to Tricorona AB reviewing the situation regarding thepossibility of making an offer for theCompany is sourced from the announcement made by Tricorona AB on 21July 2009 entitled 'Tricorona -Possible Offer for EcoSecurities'.The financial information and the quotation from Mark Nichollscontained in the "Recent trading and prospects" section are based onand sourced from the Interim Results.The reference to the strong financial and operational progressachieved by the Group is based on the Interim Results and theCompany's Annual Report and Accounts 2008.The reference to the value of the Group's current portfolio is basedon the Company's internal portfolioinformation, the Interim Results, its forward sales position and theDirector's view of potential future Carbon Credit prices.The references to the Guanabara Offer being opportunistic as to itstiming and seeking to exploit the low share price are based on thediscrepancy between the average share price of the Company since itsadmission to trading on AIM, being 160.4 pence, and the share priceimmediately prior to commencement of the Offer Period, being 45.5pence.The reference to the Company's large and diversified portfolio isbased on the Company's internal portfolio information, the InterimResults and the Company's Annual Report and Accounts 2008.The reference to the Company's leading reputation in the globalcarbon markets and its market position are based on the number ofindustry awards that the Company has obtained in recent years andmarket research reports, including:(a) 'Environmental Finances' award for 'Best CDM/JI Project Developer2008' for the second year in a rowalongside the award for 'Best Voluntary Market Project Developer';(b) New Carbon Finance award for 'Top Carbon Off-taker by Number ofDeals' in 2008; and(c) Verdantix, identifying the Company in their 'Helping you Changewith the Climate' research report of December 2008 identifying theCompany as one of the 4 leading firms in the carbon market in theirGreen Quadrant 'Analysis of CDM Project Developers'.The reference to research coverage published since the beginning ofthe Offer Period is based on the following:(a) a report from KBC Peel Hunt entitled 'Morning Note -EcoSecurities - Buy' dated 17 July 2009; and(b) a report from Mirabaud entitled 'EcoSecurities Clean Technology -Any More Bids? Mark II' dated 17 July 2009; and(c) a research report from Matrix Corporate Capital entitled 'NewEnergy - Two Steps Forward..' dated 23 June 2009.The reference to Guanabara's reasons for making the offer and thequotations used are sourced from the Offer Document.The reference to the regulatory issues and delays that have adverselyaffected the carbon markets is based on the report of the UNFCCCentitled "Call for Inputs on Efficiency in the Operation of the CDMand Opportunities for Improvement" available at:http://cdm.unfccc.int/public-inputs/2009/cdmimprov/index.html.The reference to the Group's strong progress in growing the businessis based on the Interim Results and the Company's Annual Report andAccounts 2008.The reference to the Group having delivered significant consolidatedrevenue and net revenue growth, increased issuance levels of CERs,growth in registered projects and CER production and a strong netcash position of ?55.3 million at 30 June 2009 is based on andsourced from the Interim Results.The reference to the Company's CER portfolio post-2012 amounting to125 million CERs at 30 June 2009 of which 95 per cent. did not havefixed price obligations is sourced from internal management andfinancial data.The reference to a cap and trade scheme for greenhouse gases in theUS that would allow up to 2 billion tonnes of offset credits peryear, of which up to 1.5 billion tonnes of CO2e per annum may be frominternational offset projects, is based on the American Clean Energyand Security Act (H.R. 2454) approved by the US House ofRepresentatives on 26 June 2009.The reference to the CDM market size of 1.6 billion tonnes CO2expected from registered CDM projects to the end of 2012 is based ondata from the UNFCCC website, sourced athttp://cdm.unfccc.int/Statistics/index.html;The plan for the UNFCCC parties to meet in December 2009 is sourcedfrom the information about the COP15 meetings to be held inCopenhagen contained in the following websites: http://en.cop15.dk/;and http://unfccc.int/2860.php.The reference to the Board's belief at the time of the Company's AIMadmission is sourced from the Company's AIM admission document dated14 December 2005.The reference to Guanabara's intention to delist the Company issourced from the Offer Document.The references to Guanabara in the paragraph headed 'Guanabara'sfuture strategy for the Company' are all based on informationprovided in the Offer Document.Appendix II: Definitions:"AIM" means the AIM market of the London Stock Exchange plc;"Associate" means any person who is an associate of the Company byvirtue of any of paragraphs (a) to (l) of the definition of"Associate" in Rule 2.2 of the Takeover Rules;"Board" means the board of directors of the Company from time totime;"Company" or "EcoSecurities" means EcoSecurities Group Plc;"Company Shareholders" or "EcoSecurities Shareholders" means theregistered holders of Ordinary Shares; "Directors" means the directors of the Company from time to time; "EDF Trading" means EDF Trading Limited, a wholly owned subsidiaryof ÿlectricité de France S.A.;"Group" means the Company and any subsidiary of the Company and a"Group Company" means any one of them;"Guanabara" means Guanabara Holdings B.V.;"Guanabara Offer" or the "Offer" means the offer made by Guanabara inthe Offer Document; "Interim Results" means the unaudited interim results of the Companyand its subsidiaries for the six month period ended 30 June 2009 asset out in Part 2 of the response circular posted today toEcoSecurities Shareholders;"Irish GAAP" means the generally accepted accounting principles inIreland;"Latest Practicable Date" means 3 August 2009 (being the lastpracticable date before the publication of the response circularposted today to EcoSecurities Shareholders);"Offer Document" means the offer document issued by Guanabara on 22July 2009;"Offer Period" means the period commencing on 5 June 2009;"Ordinary Shares" means ordinary shares of ?0.0025 each in the sharecapital of the Company, each an "Ordinary Share"; "RBS Hoare Govett" means RBS Hoare Govett Limited;"Takeover Rules" means the Irish Takeover Panel Act, 1997, TakeoverRules 2007 and 2008 available at www.irishtakeoverpanel.ie; and"US" or "United States" means the United States of America.Appendix III: Glossary of technical terms"Carbon Credits" means greenhouse gas Emission Reduction benefitsarising from project-level activities;"CDM" means Clean Development Mechanism, being the provision of theKyoto Protocol that governs project level carbon credit transactionsbetween developed and developing countries;"CER" means Certified Emission Reduction, being carbon creditscreated by CDM projects. 1 CER corresponds to 1 tonne of CO2eEmission Reductions;"CMIA" means the Carbon Market Investors Association - aninternational trade association representing businesses working toreduce carbon emissions through the market mechanisms of the UNFCCCand the Kyoto Protocol;"CO2e" means carbon dioxide equivalent and the unit used in the KyotoProtocol;"Emission Reductions" means units ascribed to the reduction ofgreenhouse gas related emissions;"GHG" means greenhouse gases, such as CO2 that trap heat in theatmosphere;"Gross" means in respect of contracted and portfolio acquisitions ofEmission Reductions, the total project volumes without adjustment forEcoSecurities' share of Emission Reductions from individualcontracts;"IETA" means the International Emissions Trading Association - aninternational trade association involved in the development of anactive, global greenhouse gas market and the creation of systems andinstruments to ensure effective business participation;"JI" means Joint Implementation, the provision of the Kyoto Protocolthat governs project-level carbon credit transactions betweenentities located in Annex 1 countries;"Kyoto Protocol" means the international agreement under whichindustrialised countries commit to reduce GHG emissions;"Net" means in respect of contracted and portfolio acquisitions ofEmission Reductions, adjusted for EcoSecurities' share of EmissionReductions from individual contracts;"Net Trading Margin" means the net spread on principal arrangements,net agency fees (after commission to third parties) and projectdevelopment margins, and excludes other direct cost inputs and fixedcost allocations;"Portfolio" means rights to buy or receive Carbon Credits fromEmission Reduction projects that are capable of producing up to astated level of Carbon Credits;"tCO2e" means tonnes of carbon dioxide equivalent, units for carbondioxide equivalent calculations;"UNFCCC" means the United Nations Framework Convention on ClimateChange, signed in 1992; and"VER" means Verified Emission Reduction, being carbon credits createdthrough voluntary emission reduction projects. One VER corresponds to1 tonne of CO2e Emission Reductions. - ENDS ----END OF MESSAGE---This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 04.08.2009 - 08:02 Uhr
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