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Issued and Outstanding:
Feb. 17, 2013 /PRNewswire/ - Jeff Ciachurski wishes to personally respond to
Tom Konrad's promotional news article dated
February 13, 2013.
There was a series of phone calls between Jeff Ciachurski, CEO of Western Wind Energy and
Tom Konrad, a contributing writer to Forbes. After this discussion, Mr. Konrad produced an article titled "
Why I'm Accepting Brookfield Offer for $2.60 per Share for Western Wind." In this Article, Mr. Konrad makes a series of naked assertions. To set the record straight, Mr. Ciachurski is responding to each of Mr. Konrad's subject paragraphs. We are hopeful that Mr. Konrad will reproduce, verbatim, this rebuttal from Jeff Ciachurski.
Mr. Konrad's first paragraph is entitled "
What Changed My Mind" and in this paragraph Mr. Konrad talks about speaking to fund managers and
Brookfield's head of media relations.
Jeff Ciachurski responds by saying that
Brookfield's Head of Media Relations can only disclose the party line of
Brookfield's CEO or CFO had refused to speak with
Tom Konrad. Regarding the hedge fund managers who spoke with
Tom Konrad, most are "event driven" fund managers who solely purchased stock when the Company was put up for sale or when they were aware that a sales process was imminent. Together, these event driven funds constitute approximately 13 million shares or the vast majority of the parties who have tendered. In fact, it was these funds that contacted
Brookfield and agreed to tender if the bid was raised to
$2.60. These funds became so over-weighted with our stock in a situation where they had a limited timeline, that there was no other alternative but to tender.
Mr. Konrad's second paragraph is entitled
"The Situation As I Now See It." In this paragraph, Mr. Konrad gives an opinion as to what buyers will pay; states our lack of intention to sell; declares no value to Yabucoa; states Western Wind's share price will decline significantly if the bid expires; states allegations of alienating possible buyers; and Mr. Konrad's view that he can sway the public to whether or not
Brookfield wins the vote.
"What Buyers Will Pay - Why Not More Than $3"
Mr. Ciachurski replies that Mr. Konrad is unaware that hostile bids for independent power producers are virtually non-existent. The best-suited and most efficient purchasers for Western Wind are US regulated utilities and their non-regulated subsidiaries. Mr. Konrad fails to understand that executive committees within these utilities will not bid on a company, simply for a break-up fee and incur the public disdain within their regulated jurisdiction, of getting into a hostile bidding war against an insider such as
Brookfield, who holds a below market price share position.
Brookfield knows this and the only hope of Western Wind shareholders getting a better price is by
Brookfield not obtaining the minimum tender and publicly saying it is walking away. As Mr. Ciachurski has stated to Mr. Konrad several times, this is a battle between
Brookfield and the Western Wind shareholders and not between
Brookfield and Jeff Ciachurski. Mr. Ciachurski's job is to give guidance and if Mr. Konrad feels that his investment advice has overreaching logic and conclusions, this is another feather in the cap for
"Lack of Intention to Sell - Ciachurski's Compensation"
In this paragraph, Mr. Konrad wrongly states that there will be two change of control payments. There is only one and that was paid just before the Company's AGM as a precaution that either Savitr or
Brookfield, if successful, in either the proxy battle or subsequent hostile bid, would not honor any of the employees' pre-established change of control payments. It is standard in a hostile environment, whether by proxy battle or hostile bid, that the non-incumbent winning party, not honor any employment agreement. This leads to years of litigation and in the case of the proxy battle, would have led to a diminished sales price. Mr. Konrad further fails to state that Jeff Ciachurski is one of the largest shareholders and stands to benefit the greatest from any increase in value.
"Declares No Value to Yabucoa - Financing Yabucoa"
Jeff says Mr. Konrad turns on its head, the entire basic principles of project finance. The most efficient cost of capital is bank debt. Currently, project financed debt is available at LIBOR +2.75 therefore, the more bank debt on any project, the more superior returns to the project sponsor. The more equity in a project, the lower the rate of return. Equity rates of return are much higher than bank debt therefore, companies that have to sell copious amounts of corporate equity to meet a project equity requirement, are lowering the project's total yield. No bank with an "A" rating or better, can simply increase the interest rate to meet a perceived serious risk of default.