Thought I'd share my brief communication with Dr Ralph Craven, Chairman of Genex Power.

My email to Ralph:

Hi Ralph,

I'm a shareholder who frequents the forums and on behalf of myself and many others, I wish to express my concern that the NBIO from J-Power significantly undervalues the company (GNX) and the progress your team has made.

Many shareholders have invested long-term with Genex and taken part in capital raises with a long-term view to profitability. The legwork done by the board and the equity invested by the government and the retail holders is worth far more than .275 per share. Longterm GENEX will be a major renewables player in Australia and we hope its profits remain here in Australia too. I and many others are hopeful the board shares these views.

Please take the time to read and understand our reasoning.

In August 2022, Skip Capital offered 25 cents per share.

The Non-Binding Indicative Offer, (NBIO), made by J-Power, nineteen months later, is 27.5 cents per share.

J-Power is attempting to score a bargain low-ball purchase. They attempt to justify the very low offer of 27.5 cents per share by reverting to quoting various time period Volume Weighted Average Prices, (VWAP). The common view of holders from my consultation is that the use of these VWAP calculations is quite erroneous and deliberately misleading. One only has to refer to the volumes traded over the periods used to realise how DECEPTIVE this use of the VWAP figures, by those "professionals" who prepared the offer for J-Power, really is. Most Genex Power Ltd shareholders have been, and remain, long-term holders largely motivated by the "clean renewable energy" factor. They have been, and remain, prepared to wait.

Since August 2022 shareholders have been provided with the statutory Quarterly Reports and two Annual Reports. These reports have conveyed the steady progress, particularly of the cornerstone project, Kidston Hydro. As well, shareholders have been kept abreast of the progress with the construction of the vital transmission lines and the start-up of the Bouldercombe Battery.

The following reminds shareholders of most of the key developments since Skip Capital withdrew its 25-cent per share offer:-

Construction Update for Kidston - 9 November 2022.

Kidston Pumped Storage Hydro - Construction Update - 20 February 2023.

Bouldercombe Battery Project - Construction Update - 13 March 2023.

Kidston Pumped Storage Hydro - Construction Update - 29 March 2023.

Kidston Pumped Storage Hydro / Construction Update 23 May 2023.

Kidston Pumped Storage Hydro / Construction Update - 28 June 2023.

Renewable Power Purchase Agreement - 9 October 2023.

Genex secures 337.5MW offtake with Fortescue for BCS - 9 October 2023.

Genex secures offtake with EnergyAustralia for 258MW K3W - 20 October 2023.

Bouldercombe Battery Project - Commissioning Update -30 October 2023.

K2H - Completion of Main Access Tunnel - 3 November 2023.

Commencement of Full Commercial Operations at BBP - 10 November 2023.

Commencement of Full Commercial Operations at BBP - 8 December 2023.

Commencement of Full Commercial Operations at BBP - 12 December 2023.

Appointment of PCL as Preferred EPC Contractor for BCS - 30 January 2024.

Bulli Creek Solar Project - Update on Fortescue Offtake - 29 February 2024.

Genex receives NBIO from J-POWER - 4 March 2024.

The J-Power NBIO appears to have comprehensively discounted the above MILESTONES & DE-RISKING FACTORS.

The Genex Power Ltd Board of Directors needs to consider and explain to shareholders why these impressive developments, (MILESTONES), have added substantial value to the company AND significantly DE-RISKED the Kidston Pumped Storage Hydro project. Management, being investors, also stands to benefit from such explanations being made public to shareholders.

Given the above progress which I contend has added quantifiable value, (inflation-adjusted), to Genex Power Ltd, in the nineteen months since the August 2022 25 cents per share offer from Skip Capital, it is understandable why J-Power has imposed No Shop and No Talk Restrictions.

The No Shop and No Talk Restrictions seem to say a lot about the low-ball and opportunistic NBIO from J-Power.

Shareholders will not be hoodwinked.

Myself and an overwhelmingly large proportion of shareholders will vote NO if it reaches a vote. Ultimately, GNX should stay an Australian publicly listed company and the huge soon-to-be realised revenue/profit gains are not being considered in the J-Power offer.

If Genex Power is to be taken from Australian public control, .275 cents per share is, for lack of a better term, a kick in the guts for investors and management.

Hope to hear back soon.

Kind regards,

Hi Ralph,
I'm a shareholder who frequents the forums and on behalf of myself and many others, I wish to express my concern that the NBIO from J-Power significantly undervalues the company (GNX) and the progress your team has made. Many shareholders have invested long-term with Genex and taken part in capital raises with a long-term view to profitability. The legwork done by the board and the equity invested by the government and the retail holders is worth far more than .275 per share. Longterm GENEX will be a major renewables player in Australia and we hope its profits remain here in Australia too. I and many others are hopeful the board shares these views. Please take the time to read and understand our reasoning.

In August 2022, Skip Capital offered 25 cents per share. The Non-Binding Indicative Offer, (NBIO), made by J-Power, nineteen months later, is 27.5 cents per share. J-Power is attempting to score a bargain low-ball purchase. They attempt to justify the very low offer of 27.5 cents per share by reverting to quoting various time period Volume Weighted Average Prices, (VWAP). The common view of holders from my consultation is that the use of these VWAP calculations is quite erroneous and deliberately misleading. One only has to refer to the volumes traded over the periods used to realise how DECEPTIVE this use of the VWAP figures, by those "professionals" who prepared the offer for J-Power, really is.

Most Genex Power Ltd shareholders have been, and remain, long-term holders largely motivated by the "clean renewable energy" factor. They have been, and remain, prepared to wait.

Since August 2022 shareholders have been provided with the statutory Quarterly Reports and two Annual Reports. These reports have conveyed the steady progress, particularly of the cornerstone project, Kidston Hydro. As well, shareholders have been kept abreast of the progress with the construction of the vital transmission lines and the start-up of the Bouldercombe Battery. The following reminds shareholders of most of the key developments since Skip Capital withdrew its 25-cent per share offer:

Construction Update for Kidston - 9 November 2022.

Kidston Pumped Storage Hydro - Construction Update
- 20 February 2023.

Bouldercombe Battery Project - Construction Update - 13 March 2023.

Kidston Pumped Storage Hydro - Construction Update - 29 March 2023.

Kidston Pumped Storage Hydro / Construction Update 23 May 2023.

Kidston Pumped Storage Hydro / Construction Update - 28 June 2023.

Renewable Power Purchase Agreement - 9 October 2023.

Genex secures 337.5MW offtake with Fortescue for BCS - 9 October 2023.

Genex secures offtake with EnergyAustralia for 258MW K3W - 20 October 2023.

Bouldercombe Battery Project - Commissioning Update -30 October 2023.

K2H - Completion of Main Access Tunnel - 3 November 2023.

Commencement of Full Commercial Operations at BBP - 10 November 2023.

Commencement of Full Commercial Operations at BBP - 8 December 2023.

Commencement of Full Commercial Operations at BBP - 12 December 2023.

Appointment of PCL as Preferred EPC Contractor for BCS - 30 January 2024.

Bulli Creek Solar Project - Update on Fortescue Offtake - 29 February 2024.

Genex receives NBIO from J-POWER - 4 March 2024.

The J-Power NBIO appears to have comprehensively discounted the above MILESTONES & DE-RISKING FACTORS.

The Genex Power Ltd Board of Directors needs to consider and explain to shareholders why these impressive developments, (MILESTONES), have added substantial value to the company AND significantly DE-RISKED the Kidston Pumped Storage Hydro project. Management, being investors, also stands to benefit from such explanations being made public to shareholders. Given the above progress which I contend has added quantifiable value, (inflation-adjusted), to Genex Power Ltd, in the nineteen months since the August 2022 25 cents per share offer from Skip Capital, it is understandable why J-Power has imposed No Shop and No Talk Restrictions. The No Shop and No Talk Restrictions seem to say a lot about the low-ball and opportunistic NBIO from J-Power.

Shareholders will not be hoodwinked.

Myself and an overwhelmingly large proportion of shareholders will vote NO if it reaches a vote.

Ultimately, GNX should stay an Australian publicly listed company and the huge soon-to-be realised revenue/profit gains are not being considered in the J-Power offer.

If Genex Power is to be taken from Australian public control, .275 cents per share is, for lack of a better term, a kick in the guts for investors and management.

Hope to hear back soon.

Kind regards,

Mr. Lumin.

Ralph's response:

Hi Mr. Lumin,

Thanks for your email below.

You have highlighted many of the significant achievements of Genex over the last few years.

It is also interesting to note the article that appeared in the AFR yesterday (appended to this email below) which also draws attention to some of the trials and tribulations of parties working in the renewables space.

Genex Power will address the relevant points when it prepares its ’Target Statement’ as part of the Scheme of Arrangement process. This will be available for all shareholders and the market in a few weeks time.

The Genex Board as you know must act in the interests of our shareholders as a whole when making decisions. I trust you will find many of your points addressed in the Target Statement.

Kind regards,

Dr. Ralph Craven
Independent Non-Executive Chairman

For those interested, this is the article Ralph handballed me too:

The ASX is not the place for pure energy transition betsAustralian Financial ReviewChanticleer, Anthony Macdonald10 March 2014The ASX just hasn’t cracked it as a destination for the next wave of green electricity generators. Genex Power is the latest to be worth more to someone else.It is Origin Energy and AGL Energy first, daylight second, for equity market investors seeking a way to fund Australia’s energy transition.The ASX just hasn’t cracked it as a destination for the next wave of green electricity generators.You can invest in Origin and AGL and their coal-fired cashflows today, and be part of their transition tomorrow, but there is not much else for anyone wanting to chip into Australia’s whopping $300 billion task of greening the grid.It is not as if renewable groups haven’t tried – it is just that they have mostly ended up limping off the bourse unloved, overlooked and worth more to someone that does not have to stress about quarterly cashflow reports, half-yearly earnings and scary big numbers required to fund developments. It is one thing to flag a big development pipeline (valuable in the world of renewables) and another to not freak out shareholders about funding it.Genex Power, a solar and pumped hydro group in Queensland with a $1 billion enterprise value, is just the latest.It is set to be snapped up by Japanese utility J-Power, which already has a foot in Genex’s equity, debt, development pipeline and boardroom, and is going for the kill with an all-cash bid.As long as nothing comes up in due diligence – and it really shouldn’t given how J-Power’s tentacles already wrap around its target – and assuming the Farquhar’s Skip Capital plays nice, Genex’s nearly nine-year stint as a listed company will be over.It will be sayonara Genex, just like it was for Infigen Energy, Tilt Renewables and New Energy Solar, the other renewables developers to disappear from the ASX boards in the past 3½ years.Does it matter? Well, it goes some of the way to explaining why AustralianSuper fought so hard to keep Origin Energy listed late last year. AusSuper consistently said it saw Origin as the No.1 way to play Australia’s energy transition, and it wasn’t going to sell on the cheap or pay for the privilege of owning in a leveraged buyout vehicle.AGL and Origin are the two obvious ways to invest in the transition (both require patience, particularly AGL), while other exposures are mostly mixed up inside something else. For example, you can get Pilbara electrification (an enormous task) via gas pipeline owner APA Group, or potential new energy projects at iron ore miner Fortescue and oil and gas company Woodside.Pure-play renewables are hard to find and getting harder. It’s arguably the hottest theme in the world, just not on the ASX.That tells us Australia’s $300 billion funding hurdle to green the grid – six times the cost of the NBN or 50 per cent more than went into Australia’s mining super cycle almost 15 years ago, as fund manager Schroders points out – will be more about the existing gen-tailers, private capital players and global utilities than specialist ASX-listed renewables developers.There are a few reasons why they haven’t really worked for Australia’s listed market.The first is risks inherent in being an electricity market participant in Australia. Wholesale markets are volatile, which means the value of clean energy is volatile, and any uncontracted power produced can be worth either a little or a lot depending on a whole range of issues outside of a generator’s control.The second is that developments are big, and expensive engineering projects that can be hard to fund are prone to blowouts and can take a long time to get off the ground. The equity market’s patience for anything long duration and with risk is limited.The third is government policy and regulation, which chops and changes, and the threat of government intervention which can be good or bad for a listed company but is really just another thing out its control. How does an equity investor price that risk?Genex has all of that, and more, which may help explain why its board is waving the white flag at 27.5¢ a share only a year or two from when the company is supposed to hit its straps.The company has been on the ASX boards since 2015, when it raised $8 million at 20¢ a share to list with a $32 million market capitalisation.The plan was to develop its Kidston pumped hydro project in northern Queensland, which was about turning an old gold mine into a power generator and selling electricity into the market at peak times when prices were high.Long roadTo Genex’s credit, it is getting there. It has 150 megawatts in operation with the promised pumped hydro under construction and due for energisation at the end of this year.None of it has been quick or cheap, and Genex has repeatedly tapped equity markets, banks, government agencies and strategic investors to keep developments moving.Even after all the raisings and debt deals, Genex has never posted an operating profit, while its biggest projects (two solar farms with an expected $2 billion capital requirement) are still in front of it. There are a lot of moving parts.All those moving parts have big funding numbers attached – multiple debt refinancings, new project equity sell-downs – and Genex lives with some uncertainty around its ability to continue as a going concern, as flagged in its December 31 accounts. That’s not ideal for any ASX-listed company.Genex argues it isn’t in any danger – it has advisers readying the equity sell-downs for its two big projects with the $2 billion capital requirement, it says the project finance market in the renewable energy sector is well-developed and talks with existing lenders have started – but the uncertainty is obviously enough to have the board ready to recommend J-Power’s takeover. The stock was trading at 15¢ one year ago and 23¢ five years ago.As for J-Power, it is pouncing after five years on the company’s share register, three years on its board and nearly one year after paying $10 million for a 50 per cent stake in Genex’s development pipeline.Skip Capital is Genex’s largest shareholder with a 19.99 per cent stake.


What to take from this?

it seems to me, Ralph is basically trying to say that it's all too hard for him and his colleagues thus they are happy to accept the offer and get out?

With this mentality, can we really trust him and his team to extract full value for shareholders?

Hi Ralph,

I'm a shareholder who frequents the forums and on behalf of myself and many others, I wish to express my concern that the NBIO from J-Power significantly undervalues the company (GNX) and the progress your team has made.

Many shareholders have invested long-term with Genex and taken part in capital raises with a long-term view to profitability. The legwork done by the board and the equity invested by the government and the retail holders is worth far more than .275 per share. Longterm GENEX will be a major renewables player in Australia and we hope its profits remain here in Australia too. I and many others are hopeful the board shares these views.

Please take the time to read and understand our reasoning.

In August 2022, Skip Capital offered 25 cents per share.

The Non-Binding Indicative Offer, (NBIO), made by J-Power, nineteen months later, is 27.5 cents per share.

J-Power is attempting to score a bargain low-ball purchase. They attempt to justify the very low offer of 27.5 cents per share by reverting to quoting various time period Volume Weighted Average Prices, (VWAP). The common view of holders from my consultation is that the use of these VWAP calculations is quite erroneous and deliberately misleading. One only has to refer to the volumes traded over the periods used to realise how DECEPTIVE this use of the VWAP figures, by those "professionals" who prepared the offer for J-Power, really is. Most Genex Power Ltd shareholders have been, and remain, long-term holders largely motivated by the "clean renewable energy" factor. They have been, and remain, prepared to wait.

Since August 2022 shareholders have been provided with the statutory Quarterly Reports and two Annual Reports. These reports have conveyed the steady progress, particularly of the cornerstone project, Kidston Hydro. As well, shareholders have been kept abreast of the progress with the construction of the vital transmission lines and the start-up of the Bouldercombe Battery.

The following reminds shareholders of most of the key developments since Skip Capital withdrew its 25-cent per share offer:-

Construction Update for Kidston - 9 November 2022.

Kidston Pumped Storage Hydro - Construction Update - 20 February 2023.

Bouldercombe Battery Project - Construction Update - 13 March 2023.

Kidston Pumped Storage Hydro - Construction Update - 29 March 2023.

Kidston Pumped Storage Hydro / Construction Update 23 May 2023.

Kidston Pumped Storage Hydro / Construction Update - 28 June 2023.

Renewable Power Purchase Agreement - 9 October 2023.

Genex secures 337.5MW offtake with Fortescue for BCS - 9 October 2023.

Genex secures offtake with EnergyAustralia for 258MW K3W - 20 October 2023.

Bouldercombe Battery Project - Commissioning Update -30 October 2023.

K2H - Completion of Main Access Tunnel - 3 November 2023.

Commencement of Full Commercial Operations at BBP - 10 November 2023.

Commencement of Full Commercial Operations at BBP - 8 December 2023.

Commencement of Full Commercial Operations at BBP - 12 December 2023.

Appointment of PCL as Preferred EPC Contractor for BCS - 30 January 2024.

Bulli Creek Solar Project - Update on Fortescue Offtake - 29 February 2024.

Genex receives NBIO from J-POWER - 4 March 2024.

The J-Power NBIO appears to have comprehensively discounted the above MILESTONES & DE-RISKING FACTORS.

The Genex Power Ltd Board of Directors needs to consider and explain to shareholders why these impressive developments, (MILESTONES), have added substantial value to the company AND significantly DE-RISKED the Kidston Pumped Storage Hydro project. Management, being investors, also stands to benefit from such explanations being made public to shareholders.

Given the above progress which I contend has added quantifiable value, (inflation-adjusted), to Genex Power Ltd, in the nineteen months since the August 2022 25 cents per share offer from Skip Capital, it is understandable why J-Power has imposed No Shop and No Talk Restrictions.

The No Shop and No Talk Restrictions seem to say a lot about the low-ball and opportunistic NBIO from J-Power.

Shareholders will not be hoodwinked.

Myself and an overwhelmingly large proportion of shareholders will vote NO if it reaches a vote. Ultimately, GNX should stay an Australian publicly listed company and the huge soon-to-be realised revenue/profit gains are not being considered in the J-Power offer.

If Genex Power is to be taken from Australian public control, .275 cents per share is, for lack of a better term, a kick in the guts for investors and management.

Hope to hear back soon.

Kind regards,