PowAR extends its leadership role in Australia’s clean energy transition with NZ$3 billion Tilt deal

Highlights:

• PowAR and Mercury NZ have entered a Scheme Implementation Agreement to acquire NZX- and ASXlisted Tilt Renewables Ltd for NZ$7.80 per share in cash, representing a market value of NZ$2.96 billion

• When completed, PowAR will take ownership of all of Tilt’s Australia businesses and Mercury NZ will take ownership of all of Tilt’s New Zealand businesses

• The transaction confirms PowAR’s standing as Australia’s No 1 owner and operator of wind and solar generation, with installed capacity of 1,313MW and a world-class development pipeline of more than 3,500MW

• The Board of Tilt has recommended shareholders vote in favour of the Scheme subject to an Independent Adviser’s report and in the absence of a superior offer

• Tilt’s majority shareholder, Infratil Ltd, has signed a voting deed to vote its 65.5% shareholding in Tilt in favour of the Scheme

• Mercury NZ has also agreed to vote its 19.9% shareholding in Tilt in favour of the Scheme

Powering Australian Renewables (PowAR) will cement its position as the largest owner and operator of wind and solar generation in Australia and a leader in Australia’s accelerating transition to clean energy after reaching agreement to acquire the Australian assets of Tilt Renewables Ltd (Tilt).

PowAR – a partnership between QIC, the Future Fund and AGL Energy Ltd – today announces that it has joined with Mercury NZ Limited (together the Consortium) to enter a Scheme Implementation Agreement (SIA or Scheme) to acquire all the outstanding shares not already owned in Tilt.

Under the terms of the proposed transaction, PowAR will take ownership of all of Tilt’s Australian businesses and Mercury NZ will take ownership of all of Tilt’s New Zealand businesses.

PowAR Chairman Cheryl Bart said: “This exciting transaction is absolutely aligned to our mission of leading the transition to a decarbonised, decentralised and digitised energy system – one that will deliver all Australians clean, reliable and affordable power. Tilt has built a world-class portfolio of high-quality renewable energy assets and development opportunities that will complement our existing assets and ensure we continue to drive investment in renewable energy as a pathway to Australia’s clean energy future.”

Mercury Chief Executive Vince Hawksworth acknowledged Tilt’s successful renewable energy generation development program in New Zealand and Australia, which he said was a reflection of great work by the management and team at Tilt over the past five years. “Throughout this transaction, Mercury has ensured that these New Zealand assets stay in New Zealand ownership. Completion of this transaction will position Mercury to make an even more significant contribution to New Zealand’s de-carbonisation goals,” he said.

Tilt is a highly experienced developer and operator of renewable generation assets across Australia and New Zealand, with total operating capacity of 836 MW across seven wind farms in operation and a two further wind Page 2 of 3 farms in commissioning. The company has a development pipeline of more than 5,000 MW1 capacity across various technologies, including wind, solar and battery storage and peaking capacity.

The proposed transaction, when completed, will reinforce PowAR’s standing as Australia’s largest owner and operator of renewable energy, with installed capacity of 1,313MW across seven operating wind and solar farms, with a further two wind farms in the final stages of commissioning. PowAR’s development pipeline would represent the largest, high-quality portfolio of renewable energy development opportunities in Australia, at more than 3,500MW across wind, solar, battery storage and peaking capacity.

QIC Head of Global Infrastructure Ross Israel said: “This acquisition is another demonstration of QIC’s deep energy sector capability and our origination driven by sector centric, thematic-based investment strategy. Through PowAR, we look forward to leveraging our experience in the energy sector and sustainable infrastructure, and working closely with our partners, to drive the growth of this high-quality renewable energy platform through its significant development pipeline and portfolio of existing assets.”

The Future Fund’s Head of Unlisted Infrastructure and Timberland James Fraser-Smith said: “Building on the success of PowAR, the acquisition of Tilt provides the Future Fund with increased exposure to a secular theme that is consistent with our long-term investment horizon. We are very pleased to be able to invest at scale in a high-quality Australian renewable energy platform and look forward to supporting the build out of Tilt’s significant development pipeline.”

AGL CEO and Managing Director Brett Redman said: “This is an exciting opportunity for PowAR to further extend its leadership in renewable energy generation. For AGL, participating in this acquisition aligns with our climate commitments and builds on our legacy as Australia’s largest private investor in renewable energy, and largest commercial solar provider. The proposed acquisition by PowAR will provide more renewable energy options in AGL’s generation portfolio, further supporting our orderly transition away from coal-fired power and responding to community expectations and our customers’ increasing demand for cleaner, reliable, affordable energy.”

PowAR Chief Executive Officer Geoff Dutaillis said PowAR valued the outstanding business that Tilt and its management team had created in Australia, and expected no material change to Tilt’s strategy.

“Tilt is a great business, with a passionate, committed team that has an enviable track-record. We intend to build the Australian business around the existing team’s expertise and experience and extend our lead as the No 1 owner and operator of wind and solar generation in Australia. PowAR’s strong capital partners and track record of delivery on development projects underpins our confidence that we will be able to realise the full potential of Tilt’s outstanding development pipeline,” Mr Dutaillis said.

It is PowAR’s intention to retain all of the existing Tilt staff. It is envisaged that all employees in Australia who are focused on the Australian assets will transfer to PowAR and all employees in New Zealand who are focused on the New Zealand assets will transfer to Mercury NZ.

Transaction structure and implementation

The Proposed Transaction will be implemented by way of a Scheme of Arrangement in accordance with the New Zealand Companies Act.

Under the Scheme, on the Implementation Date, the shares in Tilt’s New Zealand subsidiaries will be acquired by Mercury NZ at a price reflecting an enterprise valuation of NZ$770 million, subject to completion adjustments. PowAR would then acquire all the shares in Tilt at the Offer Price, assuming ownership of Tilt’s Australian subsidiaries.

The Consortium believes its Offer Price of NZ$7.80 per share in cash represents compelling value for all Tilt shareholders by providing certainty for shareholders and reflecting a material premium to Tilt’s recent trading levels.

The non-conflicted directors of Tilt have recommended shareholders vote in favour of the Scheme subject to an Independent Adviser’s report concluding that the offer price is within or above its value range for Tilt shares and 1 Australia and NZ Page 3 of 3 in the absence of a superior offer. Tilt’s majority shareholder, Infratil Ltd, has signed a voting deed to vote its 65.5% shareholding in Tilt in favour of the Scheme, and Mercury NZ has agreed to vote its 19.9% shareholding in Tilt in favour of the Scheme.

The Scheme requires the approval of 75% or more of the votes cast by shareholders and more than 50% of the total number of Tilt shares on issue.

The Scheme is also subject to customary conditions, including the receipt of all shareholder and regulatory approvals including the Foreign Investment Review Board, Overseas Investment Office, the Takeovers Panel and the New Zealand High Court.

The Consortium is confident that the structure of the proposed transaction and the credentials of the Consortium partners will support a successful regulatory approval process within allocated timeframes.

The proposed transaction is fully funded, with PowAR financing the transaction through a combination of equity from Consortium members and new bank debt.

BofA Securities and Jarden acted as financial advisors, and Gilbert + Tobin and Harmos Horton Lusk as legal advisors to PowAR. Citigroup and Forsyth Barr acted as financial advisors, and Chapman Tripp and King & Wood Mallesons as legal advisors to Mercury NZ.