Board of Energy Factors Backs Sithe Tender Offer
Energy Factors’ board of directors on Monday recommended that shareholders accept New York-based Sithe Energies’ latest offer of $8.25 per share for the San Diego-based energy company’s outstanding common shares.
The $8.25 per-share offer is 27% higher than the $6.50 per-share bid that Sithe initially made in November, 1987.
However, Sithe linked its latest offer to, among other things, the settlement of shareholder-initiated lawsuits that have been filed against Sithe. Those suits branded Sithe’s $6.50 per-share offer as “inadequate.”
Sithe is “trying to overcome those lawsuits by pushing up their offer,” according to one industry analyst who is familiar with Sithe’s recent tender offers. “The lawsuits said $6.50 per share wasn’t enough and they’re hoping $8.25 is enough.”
Tender Offer ‘Fair’
A Sithe spokesman on Monday said that Smith Barney, Harris Upham & Co. has described the $8.25 tender offer as “fair” to Energy Factors shareholders.
On Monday, Energy Factors’ board recommended that shareholders tender their shares. “We had a quorum at the (board) meeting and it was unanimous,” Energy Factors Chairman Robert Morris said Monday.
That recommendation contrasted with a Feb. 1 vote in which Energy Factors’ board was unable to recommend that shareholders accept Sithe’s $6.50 per-share tender offer.
At that time, Energy Factors’ non-Sithe board appointees determined that the $6.50 per share offer was “inadequate as a measure of the intrinsic value of the company,” according to Morris. Board member Raymond E. Peet even recommended that shareholders not tender their shares.
By last Friday, about 340,000 Energy Factors shares had been tendered. Sithe’s latest $8.50 per share offer will cover shareholders who tendered their shares at $6.50, Morris said.
Monday’s offer was the latest in a long and complex series of acquisition offers by Sithe, a New York-based operator of hydroelectric plants. Sithe, a U.S. subsidiary of France’s Compagnie General des Eaux. Energy Factors, owns about 55% of Energy Factors’ outstanding common stock.
Energy Factors has been seeking a capital infusion for the past year. The San Diego-based company needs additional capital to finance several proposed energy projects.
