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Renewable energy firm shareholder sues to block acquisition by Canada pension fund
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Renewable energy firm shareholder sues to block acquisition by Canada pension fund

A shareholder of renewable energy company Pattern Energy sued the company and its directors and officers on Monday for selling shares too cheaply to a Canadian pension fund.

Pattern Energy is a publicly-traded company that has a portfolio of renewable energy projects, and it has a 29 percent stake in a privately-held renewable energy development company called Pattern Development. In November Pattern Energy announced that it would be selling the company to the Canadian Pension Plan Investment Board (CPPIB) at a price of $26.75 per share. The acquisition is expected to close in the first half of 2020, “subject to Pattern Energy shareholder approval.” This suit arises out of this transaction and the “materially misleading and incomplete Proxy” that was filed with the US Securities and Exchange Commission.

According to the complaint, “the Proxy is rendered misleading by the omission of critical information concerning: (i) Pattern management’s financial projections; (ii) the data and inputs underlying the valuation analyses performed by the Company’s financial advisors, Evercore; (iii) the background of the Proposed Transaction; and (iv) Company insiders’, Evercore’s and Goldman’s potential conflicts of interest.”

The complaint states that the financials disclosed in the Proxy are not complete because they show projections from 2019-2023, while the full set of Pattern’s “projections extend out to 2027.” Additionally, the disclosures do not disclose the underlying earnings before taxes and after-tax equity cash flow. According to the complaint, the “omission of the above-referenced projections renders the financial projection included in the Proxy materially incomplete and misleading.”

The complaint also indicates a number of omissions from several documents developed by Evercore, Pattern’s financial advisor, that could materially impact the price per share. Additionally, the complaint states that the transaction’s background is not fully complete because terms are kept confidential, and Evercore and Goldman Sach’s fees are not disclosed.

The plaintiff is seeking for the proposed deal to be blocked by the court. The suit was filed in Pattern Energy’s principal place of business, the Northern District of California.