Publish Date : 26-Jul-2018
Acquisition Highlights:
108.4MWdc/ 87.0MWac solar power plant under construction with commercial operation expected in mid-2019
15-year PPA with NSW Government statutory authority Transport for NSW
Gross expected five-year average yield of 8.2% per annum, improving overall portfolio yield
Consideration being given to a battery installation to enhance risk-adjusted returns
Grows NEW's Australian exposure to approximately 20% of the total portfolio
Total portfolio has a weighted average PPA term of 16.7 years
Security Purchase Plan offer to partially fund the acquisition and enhance financial flexibility
New Energy Solar is pleased to announce that it has entered into binding agreements to acquire the Beryl Solar Farm (Beryl) from a subsidiary of First Solar, Inc. (First Solar). Beryl is the second project that NEW has acquired from First Solar in Australia, following the announcement of the acquisition of the Manildra Solar Farm. Under the agreements, and subject to the satisfaction of conditions precedent, NEW will acquire a 49% interest in Beryl shortly after construction has commenced. Once Beryl reaches commercial operation (targeted for mid-2019), and subject to remaining consents and conditions, NEW will acquire the remaining 51%.
Beryl is located approximately 5km west of Gulgong, NSW, in one of the three priority renewable energy zones identified by the NSW Government. On full commercial operation, the plant will sell approximately 134,000 MWh of electricity per annum to Transport for NSW (TfNSW) under a 15-year power purchase agreement (PPA) to meet the electricity requirements of the Sydney Metro Northwest railway.
Total construction cost is expected to be approximately A$187m. NEW's acquisition price is confidential, but based on a target unlevered five-year annual average gross yield of 8.2% per annum, compared to the current gross annualised yield on NEW's existing operating portfolio of approximately 6.8% per annum.
John Martin, CEO of NEW said, "Beryl, NEW's second investment in Australia, will further enhance the scale and contracted cashflows of our Australian portfolio. The 15-year PPA term, longer than PPAs currently offered in the Australian market, diversifies our contract tenor profile and underpins investor returns. Following the Manildra acquisition last month, we are delighted to be consolidating our relationship with First Solar through this second sizeable transaction in the Australian market."
Subject to the satisfaction of conditions precedent customary for a transaction of this nature, NEW will acquire Beryl on a levered basis, funded with cash reserves and existing and new debt facilities. The project's construction debt facility, provided by Societe Generate, MUFG Bank, and Mizuho, will convert to an AS term facility at completion. The underlying interest rate is c.81% hedged throughout the initial term, reducing exposure to future movements in domestic interest rates.
New Energy Solar's Head of Investments, Liam Thomas said, "Beryl is an ideal project for our second Australian acquisition, and we are very pleased to have added a project of this scale and quality so soon after Manildra. Once completed, approximately 20% of New Energy Solar's portfolio will be in Australia. The project provides stable SA cashflow under the long-term PPA with TfNSW. The PPA structure, under which the majority of the offtake is contracted, is consistent with our strategy to secure predictable, low-risk returns for investors. At the same time, the uncontracted volume allows us to explore other PPA arrangements, battery storage and other value-enhancing options."
Downer Utilities Australia Pty Ltd., a wholly owned subsidiary of Downer EDI Limited, commenced construction of the plant in May this year utilising First Solar's latest Series 6 modules. Beryl is expected to generate more than 199,000 megawatt hours of electricity in the first operating year, equivalent to displacing more than 167,000 tonnes of CO2 emissions per annum, powering 25,000 average NSW homes, or removing 45,000 cars from the road.
First Solar Energy Services will provide construction management services and, once completed, operations, maintenance and asset management services to the project.
Once the Beryl transaction is complete and the plant is operational, and NEW's committed and in-construction assets in the US are operational, NEW's portfolio will comprise interests in over 840MWdc of operating solar projects across the US and Australia with a portfolio value of over A$1.1 billion.
NEW's contribution to producing emissions-free electricity continues to grow with the total portfolio expected to generate more than 1,700,000 megawatt hours of electricity annually. This is equivalent to displacing more than 1,153,000 tonnes of CO2 emissions, powering 195,000 US and Australian equivalent homes, or removing 282,000 US and Australian equivalent cars from the road, every year.
Security Purchase Plan
In conjunction with the acquisition of Beryl, NEW also announces its intention to offer eligible existing securityholders the opportunity to acquire up to A$15,000 of new fully paid stapled securities in NEW (New Stapled Securities) via a Security Purchase Plan (SPP). Participation in the SPP is entirely voluntary. The proceeds of the SPP will be used to partially fund the acquisition of Beryl and to provide financial flexibility.
New Stapled Securities will be offered under the SPP at an issue price of the lower of:
the fixed price of A$1.416, which represents a 2.5% discount to the five-day volume weighted average price (VWAP) of NEW stapled securities traded on the ASX up to (and including) the record date of 20 July 2018
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