Buyer beware as (publicly traded) companies move to exploit hype around Ontario FIT program

On January 7 I wrote a post about Burnaby, B.C.-based solar manufacturer Day4 Energy and its sale of 5.1 megawatts of solar modules to Ontario’s Hybridyne Power Systems Canada, which designs and constructs utility-scale solar parks and — according to my post — “is 47.5 per cent owned by Atlantic Wind and Solar Inc.” I also wrote that “Atlantic and Hybridyne plan to use the panels for a 2 MW energy park in Newcastle, about an hour east of Toronto, and Atlantic will use the rest for a variety of rooftop solar installations, part of its plan to take advantage of Ontario’s new feed-in tariff program.”

The information about Atlantic Wind & Solar was taken right out of Day4 Energy’s press release, in which it said:

Since AWSL’s June 2009 acquisition of Hybridyne Power Systems Canada, the Company has been actively pursuing a number of exciting renewable energy projects that portend a successful 2010 with the achievement of several corporate milestones. The Hybridyne acquisition, followed by the revolutionary Green Energy Act introduced by Canada’s most populous province, Ontario, has led to a strong focus by Atlantic Wind and Solar Inc. on the exciting potential for growth in the rooftop solar business across Ontario, and has quickened the pace of its province-wide marketing efforts in that regard.

Day4’s confusion is understandable, given that Atlantic Wind has been indicating to everyone that the deal with Hybridyne was a done deal. Take the following Dec. 9, 2009, press release from Atlantic Wind, which begins as follows:

Atlantic Wind and Solar Inc. is pleased to report that its 47.5%-owned Canadian affiliate Hybridyne Power Systems Canada Inc. (HPSC) has commissioned the first Hybrid Renewable Energy Supplemented Data center in North America. The groundbreaking system was constructed over the past 6 months for Pizza Pizza Limited.

So you can imagine the confusion among investors in publicly traded (pink sheets) Atlantic Wind when they saw, buried low, this comment in a news release last week about how the acquisition that appeared a done deal is now suddenly “null and void”: “The cancellation of this transaction will be reflected in the upcoming restatement of the company’s quarterly and annual filings.”

Gotta say, this stinks — and regulators should be all over it. I mean, when the acquisition was first announced in March 2009 the company’s stock was trading at just 14 cents. It climbed as high as $4.22 a share by Dec. 11, and is now half that amount and falling. After a year — after repeated statements indicating this is a done deal — suddenly the transaction is null and void? Give me a break.

I raise this for three reasons: 1) I’ve had a couple of readers point it out, and they’re angry as hell; 2) Companies that do this need to be called out; 3) To point out that Ontario’s Green Energy Act and FIT program are going to lure many different folks to the market, some more professional than others, some more interested in talking than doing.

9 thoughts on “Buyer beware as (publicly traded) companies move to exploit hype around Ontario FIT program”

  1. Good comments; anything to say about their claim of an acquisition of 60% of AIM Global (the manufacturer of the CIT technology they were purchasing thru Hybridyne) and/or the $120m financing agreement they recently said is in place?

  2. RE: In Response to the Clean Break Article (Written by Tyler Hamilton) on March 24th 2010

    In Mr. Hamilton’s article, he presents a one-sided story that effectively bashes AWSL, implying that the Company was somehow underhanded while he chose to ignore the facts that were presented in AWSL’s News Release of March 17, 2010.

    In his article, Mr. Hamilton first establishes that AWSL had referred to Hybridyne Power Systems Canada Inc. (HPSC) as its 47.5 % owned Canadian affiliate.

    Referring (and linking) to the aforementioned Atlantic Wind and Solar Press Release of March 17, 2010, Mr. Hamilton writes “So you can imagine the confusion among investors in publicly traded (pink sheets) Atlantic Wind when they saw, buried low, this comment in a news release last week about how the acquisition that appeared a done deal is now suddenly “null and void” “The cancellation of this transaction will be reflected in the upcoming restatement of the company’s quarterly and annual filings.”

    Mr. Hamilton’s describes the Company’s message as being “buried low” in the News Release, while choosing to ignore the bold-print heading to this section was “Hybridyne Acquisition Aborted by Vendor”. The two paragraphs under this heading are as follows:

    “Hybridyne Acquisition Aborted by Vendor
    The AIM acquisition is being carried out following the unfortunate default by the vendor in the original agreement, announced previously, to acquire a 47.5% interest in Hybridyne Power Systems Canada (HPSC), rendering the transaction null and void. The cancellation of this transaction will be reflected in the upcoming restatement of the company’s quarterly and annual filings.

    AWSL had initiated the process of acquiring an interest in Hybridyne to give it an immediate presence in Ontario in light of management’s anticipation of the Government’s FIT program and accompanying Ontario-content rules, and to also provide AWSL secure access to the CIT technology manufactured by AIM Global Energy Inc. In light of these developments, Atlantic Wind and Solar Inc. will be retiring 4 million shares to treasury from the aborted Hybridyne acquisition.”

    As the headline of this News Release makes clear, (“Atlantic Wind and Solar to Acquire a 60% Interest in Its CIT Manufacturer AIM Global Energy Inc.”) the purpose of the Release was, primarily, to announce that an interest in AIM was being acquired in order to fulfill its commitment to shareholders to secure the CIT technology. As can be seen in the headline, AWSL made good on its prior statement and actually exceeded its original obligation to shareholders by acquiring a majority interest in the owner of the technology.

    Mr. Hamilton has quoted selectively and clearly appears to have a bias in his reporting. If he did not have a bias, perhaps he would have reported the facts as presented in AWSL’s News Release or, if he felt he needed clarification, perhaps he might have interrupted his apparent rush-to-judgment to pick up the telephone and call us.

    Mr. Hamilton’s one-sided reporting is an “unfortunate” disservice to the investment community.

    Mr. Hamilton also tries to imply that the stock had taken off only as a result of the Hybridyne acquisition news. This is entirely inaccurate. I know this because I am the one communicating directly with investors. The fact is, investors are excited about the converter/inverter technology which delivers up to 30% higher yields when incorporated into solar projects. When we originally proceeded to acquire Hybridyne, Mr. Thomas Cleland of Hybridyne indicated that they had the “exclusive rights” to this product. After realizing that these exclusive rights claims were in jeopardy, in the best interest of its shareholders, and to secure its corporate objectives, AWSL elected to take advantage of Hybridyne’s breach and aborted the acquisition. This is was a good management decision and again protects AWSL’s shareholders.

    Mr. Hamilton also fails to include any of the past progressive milestone news that the company has made on its own, which did not include Hybridyne. News including our recent $120 mil pre-approved financing. And most importantly, news of our 60% acquisition agreement to acquire a majority interest in AIM, the manufacturer/owner of this revolutionary CIT technology.

    Atlantic Wind and Solar’s future is very bright -This technology stands to reshape the entire renewable energy sector as we know it.

    Kindly

    Mr. Brent O’Connor

    IR Director –
    Atlantic Wind & Solar Inc.

    Phone: +1 (416) 900-0380 ext.223

    IR@AtlanticWindandSolar.com

  3. Wow, I cannot believe the level of yellow journalism and one sided half truths that I see in this print. If anyone is honestly following this story and reporting the truth then they would know that the 49% of Hybridyne that the company was committed to buy was also for the technology itself. If the company can purchase 60% of the same technology from the source rather than through a middle man does that not make more business sense? Where does that leave a journalist when he would much rather publish sensationalism rather than the latest developments of the company? I strongly suggest the author read the latest press release form a company that is doing amazing things for the residents and businesses in Ontario; here is the first paragraph for those writers that cannot research their subject properly
    Atlantic Wind and Solar Inc. is pleased to announce that it is acquiring a 60% interest in Aim Global Energy Inc., (AIM) the manufacturer of leading edge, high-yield converter/inverter (CIT) technology used in AWSL’s high yield Renewable Energy systems.

  4. The bottom line is that AWSL said it owned a large share of Hybridyne, and continued to say so for several months, and then suddenly said the deal fell through. I’ve been covering the industry and publicly traded companies for 12 years and no company makes such claims unless the deal is truly done. They could have said “is in the process of acquiring” but they didn’t. That is irresponsible, misleading to investors, and the point of the post is to point out this unprofessionalism. Sure, they’re now trying to acquiring 60 per cent of AIM, but given the past releases, how are investors to believe what is true or not true coming out of this company?

  5. Tyler, I respect your articles. You have been a powerful voice behind the renewable energy movement here in Ontario, and I don’t doubt your ability to report effectively nor do I doubt your level of expertise in this sector.

    All I’m saying is that you do not have a clear picture on the circumstances/situation.
    Whoever initially contacted you with this story obviously set out to mislead you.

    Through all proper proceedings, AWSL did in fact acquire a 47.5% interest in Hybridyne.

    Full payment was made by AWSL, on time. The deal was signed, however due to administrative issues, Hybridyne was deemed into fault.

    If you don’t pay YOUR mortgage on YOUR house, YOUR house will be taken away, and no longer be YOURS.

    Hybridyne did not meet their end of the bargain, and AWSL management felt it was in shareholders best interest to take the opportunity to get out.

    Hybridyne is an integrator who claimed to have had a secured “exclusive” licensing agreement for the AIM Inverter. On those grounds AWSL proceeded to acquire them. When that “exclusive” licensing agreement was in jeopardy, AWSL made the necessary decisions to protect its shareholders and overall business model. This is good business.

    If the Directors of AWSL had “not” taken the opportunity to drop Hybridyne and “not” went with AIM, it would have been irresponsible, unprofessional, and worst of all very misleading to investors.

    Everything happens for a reason, and now AWSL and its shareholders are in a much better situation in terms of this revolutionary technology.

    Tyler, I invite you to come down to our office at 350 Bay St, suite 1201…Under an NDA, I would appreciate the opportunity to share with you the massive developments AWSL has made in recent months. And less importantly, I could share with you some other variables re why the Hybridyne deal wasn’t in the best interest of shareholders.

    Kindly,

    Mr. Brent O’Connor

    IR Director –
    Atlantic Wind & Solar Inc.
    Phone: +1 (416) 900-0380 ext.223

  6. Funny but if you look at the Management of AWSL you will see they are also the management of another publically traded company that continually puts out false and misleading PRs regarding sales, purchase orders, product acquisitions and so on. They have even announced stock splits before they were even initiated with FINRA and now talk about ‘investigating’ giving shareholders a dividend off another play they announced that hasn’t transpired.

    Someone there should realize is it illegal and immoral to continually announce things before they are sealed and delivered. Just like AWSL, MEVT has it’s whole business grounded in speculation and misleading shareholders so mgmnt can make paper gain on their end.

    I hope the SEC has them in their sights.

  7. Tyler:

    Who is this Brent fella anyways? I have seen him blogging positive info Atlantic Wind on Ontario blogs. Is that appropriate?

    This is getting old and ask Brent about the press releases on Morton Salt, stock promotion from Pennystockchaser, and the CEO connections to Basil Meechum all described below on what appears to be a legitimate website focused on fraud in penny stocks and listed stocks.

    http://www.thestreetsweeper.org/article.html?i=54

    http://www.thestreetsweeper.org/article.html?i=65

    And what happened with Cushman Wakefield deal? We hear nothing about them lately in the releases

    Thomas Cleland and Hybridyne are reputable people in Ontario to the best of my knowledge. Doubt they would do harm to anyone, but we know that these people have misled us on Hybridyne and I wonder if they are not trying to harm Hybridyne somehow?

    Investors in Canada have lost alot of money on these same people trying to excite us about technology also in Mse Enviro-Tech symbol MEVT.

    We are tired of it. We dont need a mini Madoff robbing us.

    Thank you for the chance to voice our feelings on the matter

  8. I’ve had about enough of AWSL’s PR boy pretending this company is real…tell me PR boy, why has AWSL REPEATEDLY paid off stock promoters for featured advertisements? Be our guest and explain ALL your company’s stock promotion acitivities, there’s been so much, I can hardly keep track.

    Do you not know that 99.9% of all companies that pay for stock promotion end up in the gutter or failed? Do you really expect anyone to believe you’re the 0.1% especially after a failed acquisition

    PS You can guess why I’m short this stock, I’ve made millions shorting promoted stocks with huge red flags, and this one fits the bill to a T…any company that wastes $ and shares to get their stock up is worthless in my view and the vast majority of the time in stock market’s longterm view

    PPS The failed acquisition was NOT in the PR title as it should’ve been, congrats on hiding it with some new acquisition, what are the chances this one goes through 50/50? LOL Brent, you’re embarrassing yourself, possibly incriminating yourself too, and a year or two from now I will save this post and repost what happened to this carcass…look up charts of past promoted stocks HYHY, KYUS, UOMO, CVRG, SPNG, MDCE, ECOB, NXTH…I could go on all day, this carcass is next–thanks Brent & Co. for being so incompetent/predictable

  9. Tyler, Great article. Additionally your tenure in the sector has to be respected and is also a gauge for what isn’t smelling right. Thank you for leaning in on this company and for questioning this recent development. If anyone can bring some intelligence to the barrage of AWSL press releases it is you.

    The bottom line is this company has been skating on thin ice for a while with it press releases and half truths that lead to misinformation and misrepresentation to the investing public. More and more longs are now dropping out as the story AWSL management is telling is no longer adding up.

    The untold story of why the deal between Hybridyne and AWSL will most likely never be unearthed. Have you entertained contacting Hybridyne and Thomas Cleland for the ‘rest of the story’ ? Might be an interesting conversation. Also how about contacting Canada Green ESCO for the validity of the alleged “term sheet” for $120M in funding. Even the way the press release reads is misleading to the investing public;

    “Atlantic Wind and Solar Inc. (Pinksheets:AWSL – News) is pleased to announce that it was approached by Canada Green ESCO Inc. and that, after being provided a term sheet, it has successfully completed a $120 million financing agreement with this leading green energy funding company.”

    A “term sheet” is just another word for a LOI. A term sheet is a bullet-point document outlining the material terms and conditions of a business agreement. Term sheets are very similar to “letters of intent” (LOI) in that they are both preliminary, mostly non-binding documents meant to record two or more parties’ intentions to enter into a future agreement based on specified (but incomplete or preliminary) terms. >A term sheet may be a proposal, not an agreed-to document.<

    The press release states; ",…after being provided a term sheet, it has successfully completed a $120 million financing agreement,…" That is a total misleading statement suggesting to the investor that the $120M is in place when the truth of that matter is it is not finalized or completed. Once again a misleading press release from AWSL's Investor Relations.

    Common sense and logic tells any intelligent individual that LOI's and MOU's are worthless. They mean nothing. That is all AWSL has been floating on,…weak promises. But that is what most pinksheet companies do, prey on the hyped up hopes of the investor.

    The suggestion to come to their offices,…what a laugh. I would never believe Investor Relations of a pinksheet company. History proves that 99.9% of pinksheets are scams and frauds in the making.

    At this point the longs and investors that still believe the tripe that management is putting out can no longer use the blame story of the shorts are doing it to the price. That has been already proved as more misinformation and total fabrication.

    It appears that now that things are not what management is in damage control mode to keep its illusions reflecting in the smoke and mirrors.

    Again, great article and excellent observations on your behalf.

    Have a great weekend Tyler.

    Hailey

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