14th Mar 2016 14:50
LONDON (Alliance News) - SSE PLC on Monday said it has signed agreements to sell a 49.9% stake in the Clyde wind farm located in South Lancashire to Greencoat UK Wind PLC and and GMPF & LPFA Infrastructure LLP for a headline consideration of GBP355.0 million.
London-listed Greencoat is acquiring a larger stake in the project than GMPF & LPFA, which is the infrastructure investment joint venture between Greater Manchester Pension Fund and London Pensions Fund Authority.
As the project stands, Greencoat will hold a 28.2% stake and GMPF & LPFA will hold a 21.7% stake, leaving SSE as the operator with the remaining 50.1% stake.
Greencoat said the deal, which is expected to close later this week, is being funded through a multiple of methods, with Greencoat due to pay around GBP200.5 million of the GBP355.0 million consideration based on the stake it will acquire.
Of the total consideration, GBP165.0 million will come from Greencoat's revolving credit facility, GBP25.0 million will come from Greencoat increasing its fixed-rate loan with the Commonwealth Bank of Australia by 25% and GBP5.0 million will be derived from cash balances.
That comes to a total of GBP195.0 million, suggesting the remaining GBP5.5 million owed by Greencoat is coming from what it called "Clyde cash balances".
Following the acquisition, Greencoat said its total outstanding debt is expected to be around 38% of its gross net asset value, which is very close to its leverage limit of 40%, suggesting the company could potentially look to issue equity in the short term to repay the revolving credit facility, said analysts at Liberum.
The onshore wind farm became operation in August 2012 and is comprised of the Clyde North, Clyde South and Clyde Central wind farms and has a current capacity of 349.6 megawatts and a net load factor of 33%, Greencoat said in a statement.
Clyde North has 47 Siemens turbines with a capacity of 108 megawatts, Clyde Central consists of 49 turbines with a capacity of 113 megawatts and Clyde South consists of 56 turbines with a capacity of 129 megawatts.
All of the turbines have been developed by SSE, and the designer of the turbines, Siemens, will continue to provide turbine operation and maintenance services.
All of the existing turbines are covered by Renewable Obligation Certificates, one of the main support mechanisms for renewable electricity projects in the UK. Certificates are issued to operators to prove they are generating renewable power and can be traded with third parties.
Each turbine current receives one Renewable Obligation Certificate per megawatt hour of electricity produced, which is equal to a one megawatt turbine operating in full for a one hour period.
Importantly, SSE is currently expanding the project to increase the total capacity to around 522.4 megawatts by June 2017, representing a 50% increase from the current capacity level. That extra capacity will come from 54 new turbines with a total capacity of 172.8 megawatts.
Once that expansion at the wind farm is completed then the equity stakes held in the project by Greencoat and GMPF & LPFA will be diluted under a "construction wrap" that has an implied expansion value of around GBP467.0 million.
SSE will then hold a 70% stake in Clyde and the stake held by Greencoat and GMPF & LPFA will amount to 30%. However, Greencoat and GMPF & LPFA will have the right to make an offer for the asset if it is ever put up for sale before anyone else under a right-of-first-offer clause.
"In March 2014 SSE announced a disposal programme with intended proceeds and debt reduction of GBP1.00 billion from the sale of non-core assets and businesses and the sale of existing or in-development onshore wind farms. Today's announcement takes the total proceeds achieved to date in excess of that target and will release capital to support future investment," said SSE.
"We are pleased to announce Greencoat's latest acquisition, which will deliver an attractive investment return, in line with the existing portfolio. We are delighted to extend our relationship with SSE and co-own Clyde, one of the largest onshore wind farms in the UK," said Tim Ingram, chairman of Greencoat UK Wind.
SSE shares were up 0.6% to 1,470.0 pence per share on Monday afternoon, whilst Greencoat shares were down 0.4% to 107.61 pence per share.
By Joshua Warner; [email protected]; @JoshAlliance
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