British sustainable energy generation company Simec Atlantis Energy has signed heads of terms to sell 25% shareholding in the 220MW Uskmouth Power conversion project in Newport, Wales, to infrastructure fund manager Equitix for £32.9m in cash.
This represents an equity value of £131.5m for Atlantis’ current 100% shareholding in Uskmouth Power.
The Uskmouth coal-fired power plant will be converted to generate electricity from 100% waste-derived energy pellets.
After conversion, the power station will generate 220MW of base load power using energy pellets produced from non-recyclable waste destined for landfill, with an average caloriﬁc value of 20MJ per kg.
Uskmouth Power has agreed on 20-year power purchase agreements (PPAs) and a 20-year fuel supply agreement.
Under the 20-year PPAs, a portion of the power generated will be sold to the energy pellet processing facility and the remainder will be exported to the grid.
The conversion of the station is expected to take 18 months after completion of front-end engineering and design (FEED). The converted station will have an operational life of at least 20 years.
SIMEC Atlantis Energy CEO Tim Cornelius said: “We are obviously delighted to welcome Equitix into this project as a co-funder, but it is also their personnel, investment track record and credibility in the infrastructure markets globally that has our team so excited.
“This is a huge milestone for Uskmouth Power which will ensure the UK is ready for a future focused on reduced coal and increased renewable energy generation.”
The investment is subject to Equitix completing its confirmatory due diligence on Uskmouth Power, and final approval of the Equitix investment committee is mandatory before the completion of the transaction in the first half of 2019.
Equitix will also contribute 25% of the remaining budgeted development costs to achieve financial close of the third-party debt financing for the conversion costs of Uskmouth Power, and later, 25% of the conversion costs that will be funded by shareholders.
Equitix chief investment officer Hugh Crossley said: “This transaction represents a great opportunity for Equitix to invest in a sector in the UK that fits well with our core infrastructure strategy.
“We are committed to investing for the long-term in projects like Uskmouth Power which we expect will help us to continue to offer our investors predictable yields through stable, long-term cash flows underpinned by its robust contractual structure.”