Foresight Solar Fund Limited Completion of Acquisition and Portfolio Update (5481A)
29 December 2017 - 6:54PM
UK Regulatory
TIDMFSFL
RNS Number : 5481A
Foresight Solar Fund Limited
29 December 2017
29 December 2017
Completion of Acquisition and Portfolio Update
Further to the announcement on 12 October 2017, Foresight Solar
Fund Limited ("the Company") is pleased to confirm the completion
of the acquisition from Canadian Solar Inc. (NASDAQ: CSIQ) of a
portfolio consisting of three construction stage assets in
Queensland, Australia, representing 117MW of peak capacity once
installed.
As previously disclosed the assets are Longreach Solar Farm (17
MW), Oakey 1 Solar Farm (30 MW) and Oakey 2 Solar Farm (70 MW) with
the Company acquiring 49% interests in each of Longreach and Oakey
1, and a 100% interest in Oakey 2 ("the Acquisition
Portfolio").
Longreach and Oakey 1 are expected to connect to the grid in
March 2018 and September 2018 respectively, while Oakey 2 is
expected to connect to the grid in October 2018. Longreach and
Oakey 1 are under construction and Oakey 2 is due to start
construction now financial close has been reached.
Project finance for Longreach and Oakey 1 was already in place
when the Company signed binding contracts to acquire the projects.
In connection with the completion of the acquisition of the
Acquisition Portfolio, the Company has further secured a senior
debt facility for Oakey 2.
The Company's total equity investment, including construction
cost, has increased to c. A$74m and will be funded by the existing
Revolving Credit Facility ("RCF"). The increase is the result of an
amendment to the Oakey 2 capital structure to deliver a more
conservative gearing position. The total consideration paid to the
vendor for the Acquisition Portfolio has broadly remained
unchanged.
Longreach and Oakey 1 benefit from senior debt facilities from
the Clean Energy Finance Corporation ("CEFC") and The Bank of
Tokyo-Mitsubishi UFJ, Ltd. ("MUFG") jointly totalling A$65m across
both projects with five year terms. Oakey 2 will benefit from a c.
A$55m senior debt facility from CEFC, with a four and a half year
term to align with the maturity dates of the other projects'
financing terms. The total gearing of the Acquisition Portfolio is
expected to represent c. 58% once the assets are operational and
the facilities fully drawn down.
As previously disclosed, both Longreach and Oakey 1 have entered
into 20-year Power Purchase Agreements ("PPAs") for both power and
Large-scale Generation Certificates ("LGCs") with the Queensland
Government. The Investment Manager believes these contracts
significantly de-risk the projects, given the low credit risk of
the counterparty (Per Moody's Aa1 rating(1) ). The Investment
Manager is currently reviewing the PPA options for Oakey 2 and
expects to enter a PPA before the target commissioning date of
October 2018.
To reduce the risk of currency fluctuations and to increase the
predictability of future dividends the Company will implement a
hedging strategy, entering forward contracts for up to two years in
length to hedge the majority of its distributable foreign currency
cash flows at project level. The equity invested will not benefit
from foreign exchange hedging.
Following the acquisition, the Company's portfolio comprises 23
assets with a net peak capacity of 621MW, of which 146MW are under
construction.
Current UK Portfolio Update
The Company has taken advantage of current attractive
electricity prices and increased the proportion of fixed price
arrangements from 7% to 31% of the electricity sales of the UK
portfolio. This arrangement is for the period 1 December 2017 to 31
March 2019 at a weighted-average price of GBP43.26/MWh. This
provides greater visibility over future cash flows and limits
potential price volatility.
The performance of the UK portfolio for the second half of 2017
to date has improved throughout the period when compared with the
first half of the year. The issues experienced in the first half of
the year at specific sites have now been substantially resolved as
a result of the efforts of Foresight's asset management team and
the remedial plan implemented on the Sun Edison sites.
The expected energy generation figures for 2017 will be below
expectations given the works performed at sites throughout the year
and low levels of irradiation, currently showing an irradiation
shortfall of c. 3% for the year to date. The lower levels of
production for 2017 have been significantly outweighed by financial
compensation received through Liquidated Damages and the asset
manager is confident that future production will be robust.
For further information, please contact:
Foresight Group
Romy Abrahams RAbrahams@ForesightGroup.eu +44 (0)20 3763
6956
Stifel Nicolaus Europe Limited +44 (0)20 7710 7600
Mark Bloomfield
Neil Winward
Tunga Chigovanyika
(1)
http://statements.qld.gov.au/Statement/2017/4/20/palaszczuk-government-delivers-stable-ratings-outlook
This information is provided by RNS
The company news service from the London Stock Exchange
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