NTR deal the fruit of tough discussions

The NTR deal announced yesterday is a pragmatic solution to a long-running disagreement between its major shareholder blocs about the future direction of the group, and the desire of some shareholders to cash in their chips.

Shareholders such as Nick Furlong's Pageant Holdings and investment group One 51 have been waiting for a so-called "liquidity event" at NTR since last year, when they diverged from the Roche family, the largest investor bloc.

The bulk of NTR’s assets these days sit in its bank account, following the near €220 million recent sale of its US wind unit, Wind Capital Group. That cash gave the group the ability to buy out shareholders seeking an exit, but an agreement on price remained elusive, until now.

Yesterday’s proposal gives Pageant and the other wantaways most of what they want now, with a clear pathway to the rest.

Effectively, the European wind assets will be spun off and the Roche family will assume majority control of this unit, which will take on the NTR moniker.

The remaining bits and bobs – toll road contracts in Waterford and Portlaoise, a wastewater joint venture and an energy storage unit – will be housed separately in a company called Altas.

Shareholders can sign up to be bought out of the wind unit straight away for €2.25 per share, and Pageant and One 51 have already indicated they will do this, leaving the Roches in charge.

It had been assumed that the wantaways would be bought out of the whole group in one simple, clean transaction, but one of the sticking points was how to value the bits and bobs, holding up the whole deal.

The solution announced yesterday kicks that relatively small can down the road, while giving shareholders who want an exit most of what they want straightaway.

Altas will be managed to “optimise capital return” in the medium term, which is probably best translated as: “We’ll sell the bits and bobs off one by one, in our own time, and pay the wantaways the rest of what they’re owed when we do.”

The shareholders who want to exit get most of the value of their stake upfront, the Roche family gets to pursue their wind ambitions, and there is no fire sale of the bits and bobs, which will be properly valued in time by the market.

The deal was a long-time coming, a difficult birth. But it seems a sensible one, and proves the saying that it’s good to talk.