FRANKFURT, March 31 (Reuters) – RWE has rejected a motion by activist fund ENKRAFT against the utility’s plans to seek authorisation from shareholders to issue convertible bonds without giving existing investors the option to subscribe, saying this was in line with market practices.
RWE, responding to the motion filed ahead of the group’s annual general meeting scheduled for May 4, said subscription rights issues are subject to strict legal deadlines and limit its ability to respond to favourable market conditions.
“Conversely, a bond without subscription rights can be placed flexibly and rapidly at conditions that are attractive to the company and consistent with the market,” RWE said in a statement on the group’s website.
ENKRAFT, which disclosed a stake in RWE in 2021 while trying to force the group to spin off its brown coal activities, filed the motion arguing that waiving subscription rights allowed the firm to give “preferential treatment to individual investors”.
The motion essentially comes in response to RWE’s move to launch a 2.4 billion euro ($2.6 billion) convertible bond exclusively to the Qatar Investment Authority (QIA) as part of the German group’s move last year to buy the cleantech activities of Con Edison for $6.8 billion.
This has made Qatar RWE’s single biggest shareholder with a 9.1% stake.
ENKRAFT said that QIA received “substantial economic benefits” including a conversion price of 35.90 euros per share that was lower than the market price of RWE at the time.
“Since subscription rights were waived, it was impossible for existing shareholders to take advantage of this attractive investment opportunity,” ENKRAFT said.
$1 = 0.9189 euros Reporting by Christoph Steitz; Editing by Kirsten Donovan