Business

Corre investors urged to reject plan to allow unchecked 20% share sale

Institutional Shareholder Services says move is ‘not in line with commonly used safeguards’

Corre Energy is a developer of storage solutions for renewable power. Photograph: David Ramos/Getty Images

Joe Brennan Markets Correspondent
Mon Jun 24 2024 - 06:15

Shareholders in Corre Energy, the Dublin-listed power storage developer, have been urged by a major advisory firm to reject a plan to give the company the right to raise up to 20 per cent of its market value in a share sale without first giving them the option to participate.

Institutional Shareholder Services (ISS) said the company, whose shares hit an all-time low on Friday as it continues its search for fresh investment, said a resolution seeking such an authority at Corre’s annual general meeting (agm) on Wednesday “is not in line with commonly used safeguards” for investors in public companies.

Corre secured authority at its last agm to issue up to 10 per cent of its share capital, which is in line with international norms. It used this to raise €2.12 million in a share placing with its founders and a long-term shareholder last month, though it subsequently widened the offering to other existing investors, which brought in a further €640,000.

The cash call was designed to tide the company over as it continues talks to third parties interested in making a significant “strategic investment” in a business that was down to just €1.08 million of cash at the end of last year.

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Shares in Corre Energy, based in the Netherlands but run by an Irish team, led by chief executive Keith McGrane, fell 4.3 per cent on Friday to a record low of 31 cents, bringing its decline over the past 12 months to 91 per cent. The company floated on the Irish market in late 2021 and has a market value of €23.3 million.

The decline has been partly down to a slump across the wider green energy sector amid a decline in energy prices and the weight of higher interest rates on this capital-intensive sector.

However, it is also down to concerns about Corre having failed to sufficiently spell out the financial details of its various projects to allow investors assess their potential for profit – as well as mounting concerns over the outcome of talks with third parties to secure major investment.

The company hired investment bank Rothschild & Co to advise on the process, after it said it had fielded approaches “from multiple parties” to invest in the company.

Corre’s most advanced development is its Zuidwending (ZW1) project in the province of Groningen in the Netherlands. ZW1 will be capable of supplying up to 320MW of electricity to the grid and is due to come on stream at the end of 2026.

Other key projects include Corre’s 320MW Green Hydrogen Hub project in Denmark, another facility in the Netherlands (ZW2) and a plan to develop three compressed air energy storage plants in caverns secured last year in Germany.

ISS has also recommended that shareholders register a protest vote against the re-election of Rune Eng as a member of a depleted board, given that there would be no women around the table. Corre’s chairman, Frank Allen, former chief executive of Dublin’s Luas rail project in Dublin and current chairman of the Housing Finance Agency, had indicated he was not available for reappointment, ISS noted.

This would leave Mr Eng as the only non-executive director, subject to investors not following ISS’s advice to vote against his re-election.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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