FLOW Flowgroup

TIDMFLOW

RNS Number : 3637M

Palm Global Small Cap Master Fund

27 April 2018

Palm Intends to Vote Against Flowgroup Plc's proposed sale of Flow Energy Limited and Announces Unconditional Support for Asset Sale to OVO Energy Ltd

Palm Estimates Asset Sale to OVO Energy Ltd. Represents Approximately 10m GBP of Additional Proceeds to the Secured Creditors

Palm Global Small Cap Master Fund, LP together with Palm Active Energy,LP and Provincial House Estates Limited (UK) ( "Palm"), one of the largest shareholders of Flowgroup Plc ("Flow" or the "Company"), owner of approximately 16.68% of the outstanding voting rights of the Company, announced today that it intends to vote against the sale of Flow Energy Limited ("FEL") to Co-Operative Energy Limited ("Co-op Energy").

Joshua Horowitz, a Portfolio Manager of Palm Global Small Cap Master Fund LP stated, "We were recently made aware that the Directors of Flowgroup PLC successfully developed a contingency plan to sell the assets of FEL to OVO Energy Ltd. ("OVO")., should a proposed sale to Co-op Energy fail to achieve shareholder approval.

"As contemplated, an asset sale to OVO provides a 100% recovery for FEL's senior creditor, Shell Energy Europe Ltd. ("SEEL"), who will be paid in full, approximately GBP24m, upon a completion date of April 30, 2018. A sale to OVO also provides a superior return to the remaining creditors as a whole. Unfortunately, neither transaction is anticipated to result in any recovery to Preferred or Ordinary shareholders."

Palm also announced that it intends to fully support an asset sale to Ovo Energy Ltd. as soon as practicable.

The Directors of FEL and the Company have a fiduciary duty to first protect the senior secured creditors and then other secured creditors. A deal with OVO Energy achieves both of these objectives. We urge all Directors and advisors to work with appropriate haste in completing a transaction.

OVO Energy unambiguously represents a better home for Flow's substantial customer base. Founded in 2009, OVO Energy is the largest independent energy company in the UK with over 800,000 customers. Their ability to expeditiously complete a transaction of this size and complexity provides the best possible transition plan for Flow's customers and suppliers.

As Michael Liebreich, Founder & Senior Contributor of Bloomberg New Energy Finance has previously stated, "OVO is one of the leading new challenger utilities in the UK. They have been highly innovative, saving consumers many millions of pounds, and forcing the big six to respond. They have also pioneered new business models and technologies in a number of areas, including power storage and EV vehicle charging, helping to bring the UK one step closer to a smart, clean energy system and a sustainable future."

Should Co-op Energy attempt to act against the clear wishes of the shareholders and interfere or collude with any third parties to undermine a potential transaction with OVO Energy, Palm will make every effort to recover any loss suffered by the creditors directly from Co-op Energy and the Midcounties Co-op Board. Palm estimates the difference between the Co-op Energy transaction and the OVO Energy transaction to be over 10m GBP of additional proceeds to the secured creditors.

Enquires:

Joshua Horowitz

Palm Global Small Cap Master Fund LP

Palm Active Energy LP

+1 203 302 7010

jhorowitz@palmventures.com

Nyansa Corrah

Palm Management (UK) LLP

+1 203 388 9122

Christopher Maybury

Provincial House Estates Ltd.(UK)

+1 203 618 1126

This information is provided by RNS

The company news service from the London Stock Exchange

END

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April 27, 2018 03:00 ET (07:00 GMT)

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