The following is a summary of the principal reasons why the Special Committee and the Board of Directors have decided to make NO RECOMMENDATION with respect to acceptance or rejection of the Offer:
- Although a financially superior offer may be made before the expiry of the Offer, the Offer is the only offer to purchase all of the outstanding Shares that is open for acceptance by Shareholders at the date of the Supplementary Directors' Circular.
- There are other significant risks and uncertainties related to the Offer, which are described in further detail below. See "Risks Related to the Offer".
- Western Wind has made submissions to staff of the Ontario Securities Commission in respect of the Offeror's ability to rely on an exemption from the requirement to obtain a formal valuation in respect of the Offer. The Special Committee believes that a formal valuation will benefit all Shareholders in that it will allow them to assess the price offered by the Offeror relative to the fair market value of the Shares as determined by an independent valuator.
- The Offer is highly conditional to the benefit of the Offeror. There are a number of conditions which are not subject to a materiality threshold or other objective criteria but provide the Offeror with a broad range of grounds upon which it may decline to proceed with the Offer.
- The Offer is subject to the condition that there be validly deposited under the Offer and not withdrawn at the expiry date of the Offer, Shares representing more than 50% of the outstanding Shares held by Independent Shareholders (as defined in the Offeror Circular). However, the Offeror can waive this minimum tender condition and take up all the Shares tendered, even if the minimum tender condition is not met. If the Offeror acquires less than a majority of the Shares, the Company's ability to effectively carry on its business may be impaired by a poor working relationship with Brookfield Renewable.
- The purchase of Shares by the Offeror pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and the number of Shareholders and could, therefore, adversely affect the liquidity and market value of the remaining Shares held by the public.
- Under the Offer, the Offeror may gain effective control of the Company without any obligation to acquire the outstanding Shares that were not tendered to its bid. This is inherently coercive because a Shareholder may feel compelled to tender Shares to the Offer, even if the Shareholder considers the offer price to be inadequate, to avoid the risk that the Shareholder may be left holding a minority investment at a reduced price reflective of a minority discount and with significantly less liquidity.
- In the Offeror Circular, the Offeror has advised that if it cannot complete a subsequent acquisition transaction, it will evaluate its alternatives, which may include purchasing Shares in the market, in privately negotiated transactions, in another take-over bid for Western Wind, or otherwise, or taking no further action to acquire additional Shares. Any additional purchases will be at the discretion of the Offeror, and could be at a price greater than, equal to or less than the Offer price.