By Margaret Taylor
SSE is to sell nearly half its stake in two Highland windfarms to enable it
to fund a share buyback programme and make a dent in its £9 billion-plus of
The FTSE 100 energy company, which is headquartered in Perth, said it will
offload a 49.9 per cent stake in the Stronelairg wind farm at Fort Augustus
and Dunmaglass wind farm near Inverness to renewable energy fund Greencoat
UK Wind and its co-investor – a pension fund managed by Greencoat Capital.
The deal, which is expected to close at the end of next month, is valued at
£635 million. SSE said that £200m of the proceeds of the sale would go
towards the share buyback, which was announced last year.
It added that “the remaining proceeds will be used to reduce net debt”,
which the firm estimated in its interim results would stand at £9.8bn by
the end of March.
SSE, which will continue to operate both wind farms when the sale goes
through, said the deal would allow the business to realise shareholder value.
Shares in the business, which issued a profit warning last September, have
been on a downward trajectory since May 2018, falling by 18 per cent from
1,427.5p to 1,170p.
SSE finance director Gregor Alexander said: “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.”
He added: “Both Stronelairg and Dunmaglass wind farms 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.”
Greencoat UK Wind, which in December entered into an agreement to acquire
the Douglas West wind farm in south west Scotland from Cheshire-based Blue
Energy, already has existing interests in the Highlands with the Stroupster
wind farm in Caithness and Corriegarth wind farm near Inverness.
The fund will pay £452m for a 35.5% stake in Stronelairg and Dunmaglass
while the unnamed pension fund will pay £183m for a 14.4% stake. SSE will
continue to hold the remaining 50.1%.
Greencoat UK Wind hopes to raise £131m via a rights issue to help pay down
some of the debt it is using to finance its share of the transaction.
The fund’s chairman Tim Ingram said that he expects the deal to “deliver
attractive investment returns”.
“This transaction builds on our longstanding relationship with SSE and we
are delighted to be co-investing with a major UK pension fund partner,” he
Stronelairg wind farm, which was commissioned in December 2018 and is made
up of 66 turbines, has an installed generating capacity of 228MW.
Thirty-three turbine Dunmaglass, meanwhile, has an installed generating
capacity of 94MW.
In December SSE confirmed that a planned merger of its retail arm with
Npower had been scrapped amid “very challenging market conditions”.
Npower announced this week that it plans to cut its 16,300-strong workforce
by 900 in the coming year.