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EX-2.1 - EX-2.1 - RIDGEWOOD ELECTRIC POWER TRUST III | y85776exv2w1.htm |
EX-99.1 - EX-99.1 - RIDGEWOOD ELECTRIC POWER TRUST III | y85776exv99w1.htm |
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR
15(d)
OF THE SECURITIES EXCHANGE ACT
OF 1934
July 26, 2010
Date of report (Date of earliest
event reported)
RIDGEWOOD ELECTRIC POWER TRUST
III
(Exact Name of Registrant as
Specified in Charter)
Delaware | 000-23432 | 22-3264565 | ||
(State or Other Jurisdiction
of Incorporation) |
(Commission File Number) |
(I.R.S Employer Identification Number) |
||
1314 King Street, Wilmington,
DE (Address of Principal Executive Offices) |
19801 (Zip Code) |
(302) 888-7444
Registrants telephone number, including area code
Not Applicable
(Former Name or Former Address,
if Changed Since Last Report)
Check the appropriate box below if the
Form 8-K
filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following
provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
þ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 | Entry into a Material Definitive Agreement. |
Introduction
By letter dated July 29, 2010, a copy of which is filed as
an exhibit to this report, Ridgewood Renewable Power, LLC
informed the shareholders of Ridgewood Electric Power
Trust III (Trust III), Ridgewood Electric
Power Trust IV (Trust IV), Ridgewood
Electric Power Trust I (Trust I) and
Ridgewood Power B Fund/Providence Expansion (B Fund,
and together with Trust I, Trust III and
Trust IV, collectively referred to as the
Trusts) that, on July 26, 2010, the Trusts and
MIP II Biopower LLC (MIP), entered into an Interest
Purchase Agreement whereby:
| The Trusts will sell to MIP the landfill-gas business located in Rhode Island and jointly owned by the Trusts (the Providence Project); and | |
| Trust I will sell to MIP its wholly owned landfill-gas business located in California (the Olinda Project, and together with the Providence Project, collectively referred to as the Projects), |
for a combined purchase price of $25 million, subject to
certain adjustments (the Sale). MIP is a newly
organized Delaware limited liability company. MIP has received
equity commitments from Macquarie Infrastructure
Partners II U.S., L.P. and Macquarie Infrastructure
Partners II International, L.P., which are unlisted
infrastructure funds sponsored and managed by the Macquarie
Group, a global provider of banking, financial, advisory,
investment and fund management services based in Sydney,
Australia.
Certain terms used in this report and not otherwise defined
herein have the meanings given to them in the Interest Purchase
Agreement.
Additional parties to the Interest Purchase Agreement include:
| Ridgewood Olinda, LLC, as an additional Seller under the agreement: | |
| Ridgewood Renewable Power, LLC, solely in its capacity as Sellers Representative: and | |
| Brea Parent 2007, LLC, Rhode Island LFG Genco, LLC, Ridgewood Renewable Power, LLC and Ridgewood Power Management LLC (RPM), an affiliate of the Managing Shareholder, solely with respect to certain exclusivity terms concerning restrictions on the solicitation, discussion and negotiation of third-party alternative transaction proposals. |
Ownership
and Organization
The Trusts collectively own, directly or indirectly, all of the
outstanding membership interests in Rhode Island LFG Genco, LLC,
a Delaware limited liability company (RILG), which
together with its wholly owned subsidiaries own the Providence
Project. Trust Is ownership interest in Brea Parent
2007, LLC, a Delaware limited liability company
(Brea) is held through its 100% ownership of
Ridgewood Olinda, LLC, a Delaware limited liability company.
RILG is owned 6.8% by Trust I, 19.6% by Trust III,
35.2% by Trust IV and 38.4% by B Fund. The Olinda Project
is owned directly and indirectly by Brea.
Each of the Trusts is a Delaware trust. Ridgewood Renewable
Power, LLC, a New Jersey limited liability company (the
Managing Shareholder or Ridgewood Renewable
Power), serves as the managing shareholder for each of the
Trusts. The Managing Shareholder is controlled by Robert E.
Swanson, who is the manager, chairman, and, together with his
family trusts, owns all of the membership interests of the
Managing Shareholder.
Interest
Purchase Agreement
Pursuant to the Interest Purchase Agreement, the Trusts will
sell to MIP 100% of their respective membership interests in
RILG, and Trust I will sell to MIP 100% of its membership
interests in Brea. As contemplated, the Sale represents a sale
of all, or substantially all, of the assets of each of the
Trusts.
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The Sale is subject to various terms and conditions set forth in
the Interest Purchase Agreement, including, but not limited to,
the terms and conditions described below:
Purchase
Price Adjustments
Under the Interest Purchase Agreement, MIP has agreed to pay a
combined purchase price of $25 million: $7.5 million
for the Olinda Project and $17.5 million for the Providence
Project, subject to the following adjustments:
| plus the Working Capital of RILG and Brea and their respective subsidiaries, which may be a negative amount; | |
| minus the Indebtedness of RILG and Brea and their respective subsidiaries; | |
| plus a Swap Rate Adjustment, which may be a negative amount; | |
| minus the Retention Amount payable by MIP under the Employee Transfer Agreement; and | |
| minus Selling Expenses incurred by RILG and Brea and their respective subsidiaries. |
The Swap Rate Adjustment provides that the purchase price will
be increased or decreased to account for changes in the Swap
Rate between July 15, 2010 and the closing date of the
Sale. The adjustment will not increase or decrease the combined
purchase price by more than $5 million. If the Swap Rate
increases such that the Swap Rate Adjustment would, but for this
limit, result in a decrease in the combined purchase price of
more than $5 million, MIP would have the right to terminate
the Interest Purchase Agreement.
Representations
and Warranties; Covenants
The Interest Purchase Agreement contains customary
representations, warranties and covenants. In addition, the
Interest Purchase Agreement contains an exclusivity
provision restricting the ability of each of the Trusts, RILG,
Brea, Ridgewood Renewable Power and RPM to solicit alternative
transaction proposals from, provide information to, or engage in
discussions or negotiations with, any third party with respect
to the ownership of the Projects. The exclusivity provision is
subject to a fiduciary out provision that allows the
Managing Shareholder, under specified circumstances, and in
compliance with specified obligations, to provide information
and participate in discussions and negotiations with respect to
unsolicited alternative transaction proposals from third parties
at any time prior to obtaining the shareholder approvals
required for the Sale.
Indemnification
The Interest Purchase Agreement contains indemnification
provisions obligating the Trusts under the Interest Purchase
Agreement to indemnify MIP for:
| breaches of representations, warranties, covenants and agreements; | |
| Indebtedness or Selling Expenses incurred by the Trusts or certain of their affiliates; and | |
| certain matters relating to the Employee Transfer Agreement (described below under Employee Transfer Agreement). |
In connection with specified indemnification obligations of the
Trusts, MIP will hold back $5 million of the aggregate
purchase price for a period of 9 months after the closing
of the Sale. This holdback amount is comprised of
$2 million from the portion of the purchase price related
to the Olinda Project and $3 million from the portion
related to the Providence Project. This holdback amount also
will be used to pay any amounts owed by the Trusts to MIP once
the Final Purchase Price is determined after the closing in
accordance with the Interest Purchase Agreement.
MIP is obligated to indemnify each Trust for breaches of
MIPs representations, warranties, covenants and agreements
under the Interest Purchase Agreement.
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In no event will MIP be subject to liability in excess of the
Purchase Price for all losses or damages relating to or arising
out of the Interest Purchase Agreement or the Sale. The
Trusts liability for breaches of representations and
warranties in the Interest Purchase Agreement is limited to the
Purchase Price.
Closing
Conditions
The closing of the Sale is subject to specified conditions,
including, but not limited to:
| the Trusts obtaining approval of the Sale by a majority of the shares of each of the Trusts; | |
| obtaining required consents and approvals, including orders required to be issued by the Federal Energy Regulatory Commission; | |
| MIP obtaining debt financing for the development and expansion of the Projects; | |
| The aggregate costs, benefits and commitments, security or other credit support to be incurred or received by, or provided to, MIP under specified agreements, arrangements and grants are no less favorable to MIP, in the aggregate, than the aggregate costs, benefits or commitments, security or other credit support estimated by the Trusts. | |
| the execution and delivery of certain related agreements, including certain employment agreements with officers of the Managing Shareholder and a transition services agreement with RPM. |
The Managing Shareholder anticipates that the Sale will occur in
November or December 2010. However, no assurance can be given
that the Sale will occur at all, or that if it does occur, that
it will occur during the time anticipated by the Managing
Shareholder.
Termination;
Termination Fee
The Interest Purchase Agreement may be terminated by MIP
and/or
Ridgewood Renewable Power (on behalf of the Trusts) as follows:
| By MIP and Ridgewood Renewable Power by mutual consent prior to the closing of Sale; | |
| By either MIP or Ridgewood Renewable Power: (i) as a result of the other partys breach of any of its representations, warranties, covenants or agreements, the closing conditions related to the accuracy of or compliance with such representations, warranties, covenants and agreements would not be satisfied; (ii) if the closing of the Sale does not occur by December 31, 2010; (iii) if the closing of the Sale is permanently restrained, enjoined or otherwise prohibited by a court of competent jurisdiction; (iv) if the transactions contemplated by the Sale are restrained, enjoined or prohibited by the enactment of legislation; or (v) if shareholder approval for the Sale is not obtained for any of the Trusts within 30 days after the consent solicitation statements for the respective Trusts are sent to their shareholders. | |
| By Ridgewood Renewable Power as a result of the receipt and acceptance by the Trusts of a superior alternative transaction proposal from a third party. | |
| By MIP if: (i) Ridgewood Renewable Power does not include in, or withdraws from, the consent solicitation statements sent to shareholders of the Trusts its recommendation to approve the Sale; (ii) Ridgewood Renewable Power approves or recommends an alternative transaction proposal from a third party; (iii) subject to certain exceptions, Ridgewood Renewable Power fails to mail the consent solicitation statements to the shareholders of the Trusts within five (5) business days after the SEC completes its review of, and indicates it has no further comments regarding, the consent solicitation statements filed by Trust III and Trust IV with the SEC; or (iv) the Swap Rate Adjustment would decrease the combined purchase price by more than $5 million. |
If the Interest Purchase Agreement is terminated: (i) by
either MIP or Ridgewood Renewable Power for the failure to
obtain the shareholder approvals required for the Sale and a
definitive agreement relating to an alternative transaction
proposal is entered into within 12 months after termination
of the Interest Purchase Agreement; (ii) by Ridgewood
Renewable Power as result of the receipt and acceptance by the
Trusts of a
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superior alternative transaction proposal from a third party; or
(iii) by MIP as a result of Ridgewood Renewable
Powers failure to include in, or withdrawal from, the
consent solicitation statements sent to shareholders of the
Trusts its recommendation to approve the Sale, in each case, the
Trusts will be required to pay MIP a termination fee in the
amount $1.125 million and reimburse MIP for the reasonable
documented
out-of-pocket
costs, fees and expenses it will have incurred in connection the
Sale.
If the Interest Purchase Agreement is terminated because
MIPs lenders will not fund the amounts contemplated by the
financing arrangements set forth in the debt financing
commitments to be obtained prior to closing and as of such time
MIP would otherwise have been obligated to consummate the Sale,
then MIP will reimburse the Trusts for (i) 50%, but in no
event more than $250,000, of the reasonable documented
out-of-pocket
costs and expenses they will have incurred under a specified
site lease and landfill-gas rights agreement that RILG and one
of its affiliates expects to enter into with the Rhode Island
Resource Recovery Corporation, the owner and operator of the
landfill in connection with the Providence Project, and (ii), as
described below under EPC Contracts, 50%, but in no
event more than $375,000, of the reasonable documented
out-of-pocket
costs and expenses they will have incurred under the EPC
Contracts.
Related
Agreements
In connection with, and as contemplated by the Interest Purchase
Agreement, the following agreements have been or will be entered
into:
Employee
Transfer Agreement
Ridgewood Renewable Power, RPM and Ridgewood Energy Corporation
have entered into an Employee Transfer Agreement. Pursuant to
the Employee Transfer Agreement, MIP will offer employment to
certain employees of RPM (the Acquired Operating
Employees) who are working at the sites of the Projects
and permit each Acquired Operating Employee to enroll and become
a participant in MIP-sponsored employee benefits plans. In
addition, the Employment Transfer Agreement provides that, after
the closing of the Sale, Ridgewood Renewable Power or RPM may
direct MIP to pay certain identified retention bonuses and
severance benefits to the Acquired Operating Employees. If
Ridgewood Renewable Energy
and/or RPM
determine that MIP will not be required to pay to the Acquired
Operating Employees the full amount of the retention bonuses and
severance benefits, or there are any excess employer matching
contributions related to the retention bonuses and severance
benefits, MIP will be required to pay to the Trusts an amount
equal to the unpaid portion of the retention bonuses and
severance benefits or the excess in employer matching
contributions.
Transition
Services Agreement
Concurrent with the Sale, RPM and MIP will enter into a
Transition Services Agreement. Pursuant to the Transition
Services Agreement, RPM will agree to provide office space,
payroll services, computer and phone services, and accounting
and administrative services (including assistance with respect
to compliance with debt facilities) to MIP and its affiliates
for six months after the closing of the Sale. MIP will pay RPM
$100,000 per month for the provision of the services. In
addition, RPM will be reimbursed for all documented third-party
and
out-of-pocket
expenses.
Individual
Employment Agreements
Concurrent with the Sale, MIP II Greenpower LLC, a Delaware
limited liability company and affiliate of MIP, will enter into
employment agreements (the Employment Agreements)
with Randall D. Holmes, the Chief Executive Officer and
President of the Managing Shareholder and each of the Trusts, as
well as two senior officers of Ridgewood Renewable Power.
EPC
Contracts
In connection with the Sale, Brea and RILG will enter, into a
separate engineering, procurement and construction contract (the
EPC Contracts) for the expansion and development of
the Projects. The RILG EPC Contract is with DCO Energy, LLC, a
New Jersey limited liability company (DCO-NJ), and
the Brea EPC
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Contract is with DCO Energy California, Inc., a New Jersey
corporation (DCO-CA). Under the EPC Contracts,
DCO-NJ and DCO-CA are obligated to design, engineer, procure,
construct and provide other services required to complete gas
pre-treatment, gas compression, electricity generating
facilities, associated emission control systems, general process
control systems and other associated equipment and systems to be
constructed in connection with the development and expansion of
the Projects.
Qualifications
and Disclaimers
The description of the terms and provisions of the Interest
Purchase Agreement in this report is not complete and is
qualified in its entirety by reference to the copy of the
agreement filed as an exhibit to this report, which is
incorporated herein by reference.
The Interest Purchase Agreement has been included to provide
investors with information regarding its terms. The Interest
Purchase Agreement, and the description of the agreement, is not
intended to provide any other factual information about the
parties thereto, the Trusts, or their respective subsidiaries or
affiliates. The Interest Purchase Agreement may contain
representations and warranties of the parties to the agreement
made solely for the benefit of the other parties to the
agreement, and used for the purpose of allocating risk between
the parties. The assertions embodied in any such representations
and warranties are not categorical statements of fact and are
qualified by information in confidential disclosure schedules
that the parties have exchanged in connection with signing the
Interest Purchase Agreement. While the Trusts do not believe
that the disclosure schedules contain non-public information
that the securities laws require to be publicly disclosed, the
disclosure schedules do contain information that modifies,
qualifies and creates exceptions to the representations and
warranties set forth in the Interest Purchase Agreement.
Moreover, any representations and warranties made by the parties
may apply standards of materiality in a way that is different
from what may be material to investors, and were made only as of
July 26, 2010, or such other date or dates as may be
specified in the Interest Purchase Agreement, and are subject to
more recent developments. Accordingly, any representations and
warranties in the Interest Purchase Agreement should not be read
in isolation, but only in conjunction with the other information
about the parties to the agreement that Trust III and
Trust IV include in reports and statements they file with
the United States Securities and Exchange Commission (the
SEC).
Cautionary
Statement Regarding Forward-looking Information
This Current Report on
Form 8-K
includes forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as
amended, Section 21E of the Securities Exchange Act of
1934, as amended, and the Private Securities Litigation Reform
Act of 1995, and the safe harbor provisions thereof.
These forward-looking statements are usually accompanied by the
words anticipates, believes,
plan, seek, expects,
intends, estimates,
projects, will receive, will
likely result, will continue,
future, would, should,
could and similar terms and expressions.
These forward-looking statements reflect managements
current views with respect to future events. To make these
statements, management of the Trusts has had to make assumptions
as to the future. Management has also had to make estimates in
some cases about events that have already occurred, and to rely
on data that may be found to be inaccurate at a later time.
Because these forward-looking statements are based on
assumptions, estimates and changeable data, and because any
attempt to predict the future is subject to other errors, future
results may be materially different from those discussed or
anticipated in this report. Some of the events that could cause
actual results to differ materially from those anticipated
include, among other things, actual transaction costs and
expenses varying from estimated amounts.
Forward-looking statements should not be relied upon without
considering all of the things that could make them inaccurate.
The Trusts undertake no obligation to publicly revise these
forward-looking statements
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to reflect events or circumstances that may arise after today.
All subsequent written or oral forward-looking statements
attributable to the Trusts or persons acting on the Trusts
behalf are expressly qualified in their entirety by this section.
Additional
Information and Where to Find It
This Current Report on
Form 8-K
may be deemed solicitation material in respect of the Sale. The
Sale requires the approval of the shareholders of the Trusts.
Trust III and Trust IV expect to file with the SEC a
consent solicitation statement to be used by each of
Trust III and Trust IV to solicit the approval of its
respective shareholders for the Sale. Shareholders of
Trust I and B Fund will also receive consent solicitation
statements. Trust shareholders are urged to read the consent
solicitation statement for each Trust in which they are a
shareholder regarding the Sale, if and when it becomes
available, and any other relevant documents filed by
Trust III and Trust IV with the SEC, as well as any
amendments or supplements to the consent solicitation statement,
because they will contain important information. Shareholders
can obtain free copies of any such materials (including any
consent solicitation statement) filed by Trust III and
Trust IV with the SEC, as well as other filings made by
Trust III or Trust IV containing information about
Trust III and Trust IV, respectively, at the
SECs Internet Site
(http://www.sec.gov).
Trust III and Trust IV will also provide copies of any
such consent solicitation statement and other information filed
with the SEC to any shareholder, at the actual cost of
reproduction, upon written request to Daniel V. Gulino, Senior
Vice President and General Counsel, at 14 Philips Parkway,
Montvale, New Jersey 07645 or via telephone at
(201) 447-9000.
Participants
in Solicitation
The Trusts and Ridgewood Renewable Power, as Managing
Shareholder of the Trusts, and each Trusts executive
officers may be deemed, under SEC rules, to be participants in
the solicitation of consents from shareholders of Trust III
and Trust IV with respect to the Sale. Information
regarding the officers of the Trusts, including direct or
indirect interests in the Sale, by securities holdings or
otherwise, will be set forth in a definitive consent
solicitation statement that will be filed by Trust III and
Trust IV with the SEC and mailed to shareholders of the
Trusts in the event that shareholder approval of the Sale is
sought.
Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit |
||||
No.
|
Title | |||
2 | .1 | Interest Purchase Agreement dated as of July 26, 2010 | ||
99 | .1 | Letter to Shareholders dated July 29, 2010. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
RIDGEWOOD ELECTRIC POWER TRUST III
Date: July 29, 2010
|
By:
/s/ Jeffrey
H. Strasberg Name: Jeffrey
H. Strasberg
Title: Executive Vice President and Chief Financial Officer |
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EXHIBIT INDEX
Exhibit |
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No.
|
Title
|
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2 | .1 | Interest Purchase Agreement dated as of July 26, 2010 | ||||
99 | .1 | Letter to Shareholders dated July 29, 2010. |
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