SSE sells two Scottish wind farms to Greencoat for £635m
Energy firm SSE is selling a 49.9% stake in its Stronelairg and Dunmaglass wind farms in a £635 million deal to Greencoat UK Wind in partnership with a major UK pension fund whose investment is managed by Greencoat Capital.
The stakes equate to 160.6MW (megawatts) and the sale price implies an average valuation for the two wind farms of around £4m per MW.
SSE will continue to operate both assets while future development rights are in line with equity share. SSE announced in November its intention to create value through disposals of stakes in its growing portfolio of onshore and offshore wind farms, in line with its strategy to create value from development and operation, as well as ownership, of assets.
The transaction is expected to complete by the end of March. Following this, and the completion of the Beatrice offshore wind farm (SSE share 40% or 235MW), expected in the Spring, SSE’s renewable generation capacity will be around 4GW (gigawatts) with an expected average annual electricity output of around 11.5TWh.
SSE intends to use up to £200m of the proceeds to fund a discretionary share buyback in line with the authority granted by shareholders at its annual general meeting last July. The remaining proceeds will be used to reduce net debt. The buyback is expected to commence before the transaction completes.
Gregor Alexander, SSE’s Finance Director, said: “Both Stronelairg and Dunmaglass are a testament to SSE’s ability to design, develop, construct and operate first class renewable energy assets.
“Onshore wind makes a huge contribution to supplying low carbon electricity to the GB market and to meeting the UK’s carbon reduction targets. The sale of stakes in these wind farms to Greencoat is a continuation of SSE’s longstanding approach of partnering and securing value for shareholders at appropriate times.”
Greencoat also announced a placing to raise up to £131m by way of a non-pre-emptive issuance to institutional investors at 127p per share, a 5% discount to its last close price, that would be used to repay or reduce drawdowns on its revolving credit facility.
The placing is subject to shareholder approval at a general meeting due on 25 February.
Tim Ingram, chairman of Greencoat, said the “two high load factor, [Renewable Obligation Certificate] accredited wind farms” would deliver “attractive investment returns” and built on the firm’s relationship with SSE.
SSE was advised on the UKW transaction by Rothschild & Co and CMS.