Infratil and Mercury to make full offer for Tilt Renewables

Infratil Limited 5 Market Lane, PO Box 320, Wellington, New Zealand Tel +64-4-473 3663 www.infratil.com




15 August 2018



Infratil and Mercury to make full takeover offer for Tilt Renewables

Infratil Limited (through its subsidiary Infratil 2018 Limited) ("Infratil") and Mercury NZ Limited
("Mercury") have today announced their intention to make a full takeover offer for Tilt
Renewables Limited ("Tilt Renewables"). Infratil and Mercury already respectively hold or control
51.04% and 19.99% of the Tilt Renewables shares.

The offer price of NZ$2.30 represents a 24.3% premium to the closing share price of Tilt
Renewables on 11 May 2018, being the last trading day before Mercury acquired a 19.99% stake
in Tilt Renewables from TECT Holdings Limited ("TECT"), a company 100% owned by the
Tauranga Energy Consumer Trust, for NZ$2.30 per share.

Infratil is confident that the Board of Tilt Renewables will support the offer, given the premium it
represents for minority shareholders relative to recent trading and comparables in the Australian
renewables sector as well as the delivery of certain value to Tilt Renewables minority
shareholders.

Tilt Renewables has approximately 11% market share of installed wind capacity in Australasia,
with a total installed capacity of 637MW across 8 wind farms. Tilt Renewables is well positioned
to contribute to the continued decarbonisation of Australia and New Zealand with a development
pipeline of more than 1,600MW of planning approved projects covering wind, solar and storage
technologies. Tilt Renewables has recently submitted a bid to sell output from the Dundonnell
Wind Farm ("Dundonnell") to the Victorian Government. Dundonnell is a 336MW development
project in Western Victoria that will require significant capital investment by Tilt Renewables and
its shareholders.

Tilt Renewables has stated that it intends to fund Dundonnell using a combination of new
corporate debt and a significant equity raising (representing approximately 45% of Tilt
Renewables' current equity value
1
). Infratil and Mercury's offer provides shareholders with the
opportunity to sell their Tilt Renewables shares at an attractive price. Alternatively, in the event of
a successful Dundonnell bid outcome, shareholders will be required to contribute a significant
amount of new equity relative to their existing shareholding or be diluted in an equity raising.

Infratil believes Tilt Renewables is well positioned to continue executing on its strong and diverse
development pipeline. For Infratil, the offer represents a continuation of its proven approach of
investing in businesses with supportive market dynamics that can respond to a disciplined focus
on operating performance and capital allocation. Tilt Renewables will become a more meaningful
investment for Infratil. Infratil is looking forward to partnering with Mercury and contributing
towards the continued decarbonisation of Australasia.


1
Based on the closing price of Tilt Renewables shares on the NZX of NZ$2.13 on 14 August 2018, being the last trading day prior to the lodgement of
Infratil and Mercury's notice of intention to make a full takeover offer.

TECT, the third largest shareholder in Tilt Renewables which continues to hold 6.81%, granted
Mercury an option over the remainder of its shares in May 2018. Following the offer becoming
fully unconditional Mercury has agreed to exercise the option to acquire those shares in a manner
which complies with the takeovers code, with Infratil ultimately to become the holder of those
shares. The agreement between Infratil and Mercury, combined with the shares covered by the
TECT option, aggregates to 77.84% of Tilt Renewables shares.

NZ$208.54m of funding is required to acquire all of the shares that Infratil and Mercury do not
currently hold or control at the offer price. Infratil has sufficient funding capacity and intends to
fund the takeover offer, and any near-term Tilt Renewables development projects, through the
use of existing cash and debt facilities available to it.

The only substantive condition of the offer is approval from the Australian Foreign Investment
Review Board ("FIRB"). There is also a 50% acceptance condition that will be satisfied promptly
after the offer is launched. There are some other customary restrictive conditions that Infratil and
Mercury currently intend to waive or declare as satisfied (to the extent permitted by law) once the
FIRB condition is satisfied. Payments would commence within 7 days thereafter.

A copy of the Notice of Intention to make an offer has been sent to the NZX and ASX. The offer is
intended to be formally sent to shareholders in early September, and is expected to close in
October.

UBS is acting as financial adviser to Infratil. Buddle Findlay is providing legal advice.



Any enquiries should be directed to:

Mark Flesher, Investor Relations, Infratil Limited mark.flesher@infratil.com

---

TILT RENEWABLES LIMITED // FULL TAKEOVER OFFER
Additional information:
Draft "additional information" follows, for insertion into Takeover Offer at the end of the Takeover Notice period, per rule 44(2). To avoid doubt, this
document remains subject to update, or amendment, and does not form part of the Takeover Notice.

WHY YOU SHOULD ACCEPT THIS OFFER

This section sets out Infratil and Mercury's views on the merits of the Offer
1
. It is not the independent
adviser's report on the merits of the Offer.

1. IF YOU ACCEPT THE OFFER, YOU WILL RECEIVE AN ATTRACTIVE
PREMIUM FOR YOUR TILT RENEWABLES SHARES

 The offer price of NZ$2.30 per share represents a:
- 24.3% premium to the undisturbed closing share price of Tilt Renewables Shares on the
NZX on 11 May 2018
2

- 19.7% premium to the undisturbed one-month VWAP
3
of Tilt Renewables Shares on the
NZX as at 11 May 2018
- 22.9% premium to the undisturbed three-month VWAP
3
of Tilt Renewables Shares on the
NZX as at 11 May 2018
- 8.0% premium to the closing share price of Tilt Renewables Shares on the NZX on 14
August 2018
4


Offer price premium to recent Tilt Renewables share price



1
The Offer is being made by Infratil 2018 Limited ("Infratil"), a wholly owned subsidiary of Infratil Limited, and Mercury NZ Limited ("Mercury"). The
Offer is made for 100% of the fully paid ordinary shares in Tilt Renewables Limited ("Tilt Renewables").
2
Being the last trading day before Mercury acquired a 19.99% strategic stake in Tilt Renewables from TECT Holdings Limited, a company 100%
owned by the Tauranga Energy Consumer Trust, for NZ$2.30.
3
VWAP means the volume weighted average price at which Tilt Renewables Shares have traded on the NZX Main Board for the relevant period.
VWAP is calculated as the total dollar value of shares traded, divided by the total volume (or number) of shares traded during the period referred to.
4
Being the last trading day prior to the lodgement of Infratil and Mercury's notice of intention to make a full takeover offer.
$2.30
$1.85
$1.92
$1.87
$2.13
Offer PriceClosing Price
(11-May 18)
Undisturbed 1-
month VWAP
Undisturbed 3-
month VWAP
Closing Price
(14-Aug 18)
24.3% 19.7% 22.9% 8.0%

TILT RENEWABLES LIMITED // FULL TAKEOVER OFFER
2. THE OFFER REPRESENTS A HIGHLY ATTRACTIVE VALUATION MULTIPLE
FOR TILT RENEWABLES AND THE OFFER IS HIGHER THAN THE
AVERAGE OF BROKER PRICE TARGETS

 The offer price of NZ$2.30 implies a ratio of enterprise value ("EV")
5
to earnings before interest,
tax, depreciation and amortisation ("EBITDA") for the 12 months to 31 March 2018 of 12.2x
6
. This
compares favourably to the ratio of EV to EBITDA over the same period for Tilt Renewables'
closest comparable company; Infigen Energy Limited ("Infigen")
7
.
 The Offer represents a premium to the average of broker analyst 12-month price targets
8
for Tilt
Renewables.

Comparison of valuation multiples between the
implied offer price valuation and the current
trading multiple of Infigen


Offer price premium to average of broker
analyst 12-month price targets




3. THE OFFER PROVIDES CERTAINTY OF PRICE DURING A PERIOD WHERE
TILT RENEWABLES POTENTIALLY HAS NEAR-TERM FUNDING
REQUIREMENTS

 Tilt Renewables has a diverse pipeline of development opportunities and recently submitted a bid
into the Victorian Renewable Energy Auction Scheme ("VREAS") to sell the output from the
Dundonnell Wind Farm ("Dundonnell") to the Victorian Government. Should Tilt Renewables be
awarded a contract under the VREAS, construction of Dundonnell is anticipated to begin in late
2018 with an estimated total construction cost of approximately A$600 million.
 Tilt Renewables has stated that it would fund Dundonnell and the associated VREAS bid using a
combination of new corporate debt and a significant equity raising of approximately A$300 million,
representing approximately 45% of Tilt Renewables' equity value
9
before the announcement of
the intention to make this Offer.
- Any such equity raising may be at a discount to the then trading price of Tilt Renewables
Shares and may or may not allow for pro-rata participation by Tilt Renewables
shareholders.
- Tilt Renewables shareholders who do not participate in an offer of Tilt Renewables
Shares will have their shareholding diluted.

5
Infratil and Mercury consider that enterprise value is the best valuation metric for comparing relative trading multiples. It represents the total value of a
company (including outstanding debt balances and cash) and allows for comparison of companies that may have differing capital structures.
6
Net debt of A$593.1m as at 31 March 2018. NZD/AUD exchange rate of 0.94 as at 31 March 2018.
7
Net debt of A$567.7m as at 31 December 2017, pro-forma adjusted to reflect the refinancing of syndicated facilities (assumes the total A$163m
Bodangora construction facility has been drawn as commercial operation commencement is anticipated for August 2018). Investments accounted for
using the equity method of A$1.2m as at 31 December 2017. EBITDA is calendarised to 31 March 2018 with EBITDA for the financial year ended 30
June 2018 based on FactSet broker consensus as at 14 August 2018.
8
Represents the FactSet broker consensus as at 14 August 2018. The range of broker price targets was NZ$2.00 to NZ$2.25.
9
Based on the closing price of Tilt Renewables Shares on the NZX of NZ$2.13 on 14 August 2018, being the last trading day prior to the lodgement of
Infratil and Mercury's notice of intention to make a full takeover offer.
12.2x
7.4x
Tilt Renewables (Offer Price)Infigen (Current)
EV/EBITDA (Mar
-
18)

$2.30
$2.15
Tilt Renewables (Offer Price)Average 12-month broker
price target
6.8%
64.6%

TILT RENEWABLES LIMITED // FULL TAKEOVER OFFER
 As Tilt Renewables prepares to commence developing its pipeline of near-term opportunities with
the ultimate goal of more than doubling its assets under management by 2020, shareholders
must consider whether they are comfortable with the change in Tilt Renewables' risk profile that
comes with developing large-scale renewable energy projects.
 Infratil and Mercury's Offer provides minority shareholders with the opportunity to sell their Tilt
Renewables Shares at an attractive price. Alternatively, should the Dundonnell bid be successful,
shareholders will be required to contribute a significant amount of new equity relative to their
existing shareholding or be diluted in an equity raising.


4. INFRATIL LIMITED AND MERCURY ALREADY CONTROL 71.03% OF TILT
RENEWABLES

 Infratil Limited already has the ability to control appointment of directors to the Tilt Renewables
board. Between them Infratil Limited and Mercury already control 71.03% of Tilt Renewables and
have the ability to influence the business plan, capital structure and dividend policy of Tilt
Renewables.
 If you do not accept the Offer and should the Offer not achieve acceptances of 90% or more you
will continue to be a minority shareholder and Tilt Renewables, under Infratil Limited and Mercury
control, may or may not elect to pay a dividend in each or any year. In addition, current low levels
of liquidity will likely be further reduced.


5. TECT HOLDINGS LIMITED ("TECT"), A COMPANY 100% OWNED BY THE
TAURANGA ENERGY CONSUMER TRUST, A SIGNIFICANT SHAREHOLDER
IN TILT RENEWABLES, HAS GRANTED MERCURY AN OPTION OVER ITS
SHARES. MERCURY INTENDS TO EXERCISE ITS OPTION WHEN THE
OFFER IS FULLY UNCONDITIONAL

 In May 2018, TECT sold a 19.99% stake in Tilt Renewables to Mercury for NZ$2.30 per share
and granted an option over the remainder of its Shares.
 TECT remains the third largest shareholder in Tilt Renewables with 6.81% of the voting rights.
 Following the Offer becoming fully unconditional, Mercury has agreed to exercise the option to
acquire all remaining Shares held by TECT in a manner which complies with the Takeovers
Code, with Infratil ultimately to become the holder of those Shares.
 The Shares held or controlled by Infratil Limited and Mercury, combined with the Shares covered
by the TECT option, aggregates to 77.84% of Tilt Renewables Shares.


6. THE OFFER CONSIDERATION IS ALL CASH FOR 100% OF YOUR SHARES
AND REPRESENTS AN ATTRACTIVE OPPORTUNITY TO SELL

 The consideration offered to Tilt Renewables' shareholders is 100% cash, and Infratil and
Mercury's Offer is for all of your Tilt Renewables Shares.
 If you accept the Offer and the Offer becomes unconditional, you will be paid the consideration for
your Tilt Renewables Shares in New Zealand dollars no later than seven days after the later of
the date on which your acceptance is received and the date on which the Offer is declared
unconditional.
 Infratil and Mercury may arrange for a third party to provide a currency conversion service. This
would allow you to elect (at your own cost) to have the New Zealand dollar consideration payable
for your Tilt Renewables Shares converted to a different currency
10
.

10
Provided that this will be a matter between yourself as shareholder and the third party.

TILT RENEWABLES LIMITED // FULL TAKEOVER OFFER
 The Offer provides you the ability to sell your shareholding in Tilt Renewables at an attractive
price. Tilt Renewables' lack of liquidity means that, should you wish to sell your Tilt Renewables
Shares on-market at any point, you may struggle to find a buyer at the price you wish to sell.
- Subject to final acceptance levels, there are likely to be lower levels of liquidity in Tilt
Renewables Shares after the Offer, meaning you are less likely to be able to sell your Tilt
Renewables Shares.
- In the last year there were an average of 74,865 Shares traded on the NZX per day
(representing 0.11% of Tilt Renewables' current free float Shares outstanding
11
and an
average daily trading value of NZ$151,768)
12
.
 Tilt Renewables' shareholders who wish to accept the Offer but maintain an exposure to Tilt
Renewables can do so indirectly by owning shares in Infratil Limited and/or Mercury.


7. THE OFFER IS CURRENTLY THE ONLY TAKEOVER OFFER AVAILABLE TO
SHAREHOLDERS, AND IN THE ABSENCE OF THIS OFFER THE TILT
RENEWABLES SHARE PRICE IS LIKELY TO TRADE AT A DISCOUNT TO
THE OFFER PRICE

 Infratil and Mercury believe that no other competing Offer is likely to be forthcoming given that
together they already hold or control 71.03% of Tilt Renewables Shares. Infratil and Mercury are
highly unlikely to support an alternative Offer for Tilt Renewables.
 Should the Offer not proceed, there is a significant likelihood that the Tilt Renewables share price
will trade below the offer price. The last time the Tilt Renewables share price closed at or above
NZ$2.30 was 31 January 2017 (over 18 months ago) and it has consistently been below NZ$2.30
since that date.

Historical share price performance




11
Free float Shares of 69,354,817 excludes the Shares owned by Infratil, Mercury and TECT.
12
Based on the 12 months prior to the date on which Infratil and Mercury announced their intention to make the Offer (excluding the acquisition of a
19.99% stake in Tilt Renewables by Mercury on 14 May 2018).
1.60
1.70
1.80
1.90
2.00
2.10
2.20
2.30
2.40
Oct-16Dec-16Feb-17Apr-17Jun-17Aug-17Oct-17Dec-17Feb-18Apr-18Jun-18
Share price (NZ$)

Closing share priceOffer PriceClosing share price prior to Mercury acquisition
Closing share price prior to Mercury acquiring a 19.99%
stake in Tilt Renewables for NZ$2.30 per share

TILT RENEWABLES LIMITED // FULL TAKEOVER OFFER
8. THERE IS NO BROKERAGE PAYABLE FOR ACCEPTING THE OFFER

 Accepting shareholders will not be charged brokerage under this Offer.