Correction: The shareholders meeting is on Friday 9th of October.
Operations, reporting and shareholders meeting
All assets (25 PV power plants) are operating and delivering electricity to the grid on a daily basis. 17 of the power plants are still not receiving FIT payment from GSE for the electricity delivered to the GSE. At the end of September 2015, GSE has an accumulated unpaid electricity bill of approximately EUR 10m. A more detailed update on operational status will be given in the Shareholders meeting the 9th of October and in the third quarter 2015 report.
The third quarter 2015 report will be released later than previously announced. The announced date is 30 October 2015. The new reporting date will be 30 November 2015. The reason for postponing the report release is to await the outcome of the criminal and administrative court proceedings that will take place in October.
The Company will convene a shareholders meeting on Friday 9 October 2015 in order to present current status, and for the Board and administration to be available for questions and clarifications from the shareholders on the current status of the company. The time and venue on the 9th of October will be announced in a separate stock exchange notice.
Status of criminal proceedings against Aveleos directors and related parties
Reference is given to previous stock exchange notices and quarterly reports from EAM Solar ASA.
Since the execution of the partial closing of the P31 acquisition the 15th of July 2014, some of the Directors of Aveleos SA have been indicted by the Prosecutors Office in Milan for several crimes against the State of Italy and other parties. The Prosecutors Office's investigation was concluded in the first quarter 2015, and at current the Criminal Court of Milan is conducting the preliminary hearing in order to decide on approving the Prosecutors Office request for a committal to trial.
Aveleos SA is a special purpose vehicle, established in 2010, owned by Enovos of Luxembourg (59%) and Avelar Energy (41%), with the specific purpose to build for sale PV power plants. Aveleos has no employees but is managed by a Board of Directors consisting of 3 Enovos directors and 2 Avelar directors. The Enovos directors since the inception of Aveleos SA has amongst other been Jean Lucius, CEO of Enovos, and Michel Schaus, member of the Enovos Executive Board.
The preliminary hearing in the criminal proceedings started the 3rd of June 2015. On the 15th and 17th of September the preliminary hearings were continued, and the preliminary conclusions from the hearing are as follows:
The judge of the preliminary hearing of the criminal proceedings against, inter alia, the Aveleos' directors Marco Giorgi and Igor Akhmerov, has given EAM Solar ASA and its daughter company EAM Solar Italy Holding S.r.l. the status of a victim of fraud with reference to the crime of contractual fraud (as described in point F of the Prosecutors Office of Milan's request for committal for trial).
Mr Giorgi and Mr Akhmerov are accused of several crimes, including organised crime, aggravated fraud aimed at obtaining public contributions, filing of fraud declarations and contractual fraud against EAM.
In particular, under indictment point F, Marco Giorgi and Igor Akhmerov are claimed to be responsible of collaborating with each other, as representatives of Aveleos SA,, upon receiving the first instalment of the total payment of Euro 36.864.618 subject to the transfer of the shares of the companies that comprise the P31 portfolio. Together they are accused of having procured an illegitimate profit to Aveleos SA, equal to the value of the sales agreement, as they deceived EAM by not disclosing to the latter the lack of the necessary requirements in order to be granted with the incentive tariffs by the GSE and therefore convinced EAM Solar Italy Holding and its holding company, EAM Solar ASA, to make bank transfers with three different payments, in such a way causing a serious economic damage to EAM Solar on 15 July 2014.
Furthermore, the judge of the preliminary hearing has allowed EAM to summon Aveleos SA, Enovos Luxembourg SA and Avelar Energy Ltd as financially liable parties for the economic damage suffered by EAM as a result of the fraud. The judge rejected the objections of the companies summoned as financially liable, which asked to be excluded from the criminal proceedings
The next preliminary hearing will be held on 20 October 2015. The judge will most likely schedule another preliminary hearing before deciding on the request for committal for trial of the defendants.
By obtaining the status as a victim of a fraud, EAM received the investigation documentation from the Prosecutors Office. The documentation has enabled EAM to prepare for the forthcoming legal measures, beyond the criminal case in Milan, to be taken in order to seek compensation for the economic damages caused by the fraud against EAM.
The next legal steps under criminal and civil law in Italy, Luxembourg and Switzerland are now being prepared with EAM's advisors.
Status of the FIT suspension and administrative proceedings against GSE
Gestore Servizi Energetici ("GSE") has unilaterally suspended payments of their electricity bills from 17 power plants since July 2014. During this period EAM has challenged the payment suspension conducted by GSE in several administrative court proceedings. On the 27th of January 2015 the State Council ruled, at EAM's request in favour of EAM, that GSE had to make a decision on the validity of the FIT contracts and decide on a final conclusion since the payment suspension measure according to Italian law cannot be continued without a definite timeline.
GSE has a triple role as both the administrative body responsible for authorizing PV power plants, responsible for regulating operations and controlling compliance of PV power plants, as well as being the commercial customer of the purchase of electricity from the PV power plants.
In April the administrative court in Lazio (TAR) decided that the suspension measure and the merits of the suspension would be subject to a court decision the 9th of July for 7 of the 17 power plants.
Following this decision by the TAR, GSE issued a new suspension measure on the 30th of April with a 90 day finite timeline for a decision by GSE on the validity of the FIT contracts for all 17 power plants.
In the first week of May GSE conducted physical inspections together with EAM personnel of the 17 suspended power plants, and in addition GSE has received information requested related to the construction and permitting of the PV power plants in 2010 and 2011. Most of this material was previously received by GSE in 2010 and 2011.
On the 9th of July the administrative court (TAR) decided that since GSE had conducted inspections and was in the process of concluding their internal evaluation of the validity of the FIT with a definite deadline being the 29th of July 2015, TAR ruled that GSE should make their conclusion within the stated deadline.
No decision has been taken by GSE within the deadline of the 29th of July and GSE has not resumed payments of the FIT. Consequently, GSE is now in breach with the order issued by the Administrative Court of Lazio (TAR).
Based on the lack of decision and breach of law by GSE, EAM has summoned GSE and asked the administrative court to take urgent measures against GSE. The court will likely decide on this issue on the 15th of October 2015.
In light of the breach of administrative law and breach of EAM's legal rights conducted by GSE, and the administrative court rulings in favour of EAM, EAM took the initiative to a meeting with the administration of GSE, represented its President, Mr Sperandini, in order to see if a negotiated solution could be found.
The meeting took place the 14th of September 2015 in Rome. Present in the meeting were GSE, representatives from the ministry, EAM representatives and also the Norwegian Ambassador to Italy, Mr Grydeland.
Although an amicable meeting, the meeting was inconclusive since GSE considers itself incapable of performing its legal administrative obligations and make a final decision on the validity of the FIT contracts for the suspended power plants. Consequently, EAM is now forced to initiate the necessary legal action in Italy, in the European Union and under the protection of the International Energy Charter Treaty in international arbitration courts, in order to enforce and protect the legal rights of EAM Solar ASA.
For further information, please contact:
Viktor E Jakobsen, Executive Director, phone +47 9161 1006, viktor@eam.no
Audun W. Iversen, CEO, phone +47 916 16 250, audun@eam.no
About EAM Solar: EAM Solar is a utility company that acquires and operates solar power plants. The Company currently owns solar PV power plants in Italy. The plants are operating under long-term sales contracts.