8th Dec 2016 07:15
LONDON (Alliance News) - National Grid PLC on Thursday told shareholders they are set for a GBP4.00 billion windfall after the owner of the UK's energy networks sold off a large stake in its gas distribution business.
National Grid already had said it was looking to sell a stake in its UK gas distribution business and on Thursday confirmed it will sell of a 61% stake for GBP3.60 billion in cash, while retaining a minority 39% stake.
The sale was to a consortium comprised of Macquarie Infrastructure & Real Assets Allianz Capital Partners, Hermes Investment Management, CIC Capital Corp, Qatar Investment Authority, Dalmore Capital and Amber Infrastructure Ltd/International Public Partnerships Ltd.
London-listed International Public Partnerships released a statement confirming the deal on Thursday. Its share of the purchase price is GBP275.0 million, with the rest of the balance coming from the other investors.
"The company expects base-case returns from this investment at levels which are consistent with its other regulated investments," said International Public Partnerships.
"The consortium will now work with National Grid and other stakeholders to complete the regulatory process necessary to reach financial close, expected to be towards the end of the first quarter of 2017. Further details of INPP's investment will be provided at that time," International Public Partnerships added.
The deal values the entire gas distribution business at GBP13.80 billion, National Grid said.
In addition, National Grid said it will receive GBP1.80 billion from additional debt financing.
Once completed, National Grid will return GBP4.00 billion through a special dividend and share buybacks.
"At least 75% of the net proceeds are expected to be returned via a special dividend in the second quarter of calendar year 2017. Net proceeds are calculated after retaining GBP700.0 million of the additional debt financing, in order to maintain the equity value of our 39% interest in [the gas distribution business], and after deduction of costs of around GBP500.0 million," said National Grid.
"Completion of the transaction is conditional on the receipt of merger clearance from the European Commission. Subject to satisfaction of this condition, National Grid expects that the transaction will complete on or prior to March 31, 2017," it added.
National Grid said it is also looking into the possibility of selling another 14% stake in the UK gas distribution business to the consortium on "broadly equivalent terms" to the transaction revealed Thursday, and said details will provided if an agreement is reached.
By Joshua Warner; [email protected]; @JoshAlliance
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