Renewable Energy Generation Limited (REG), announces the sale of its 10MW Denzell Downs wind farm project to BlackRock Renewable Income UK, a fund managed by BlackRock for a total enterprise value of £24.4 million.
Under the agreement REG will oversee construction of the project through a Construction Management Agreement and operate the completed wind farm on behalf of BlackRock via an Asset Management Agreement.
REG will receive upfront cash consideration of £10.5m, with a further £3.9m payable following commissioning of the scheme, anticipated to be in early 2016 and will recognise an initial £11m of profit on the sale. The proceeds of the sale will be reinvested in REG's pipeline of consented renewable assets. Construction funding will be provided by BlackRock.
REG's unrestricted cash resources now total around £22m, with further deferred consideration from recent asset sales of £5.9m recognised as receivable in the accounts of the company. The company's next tranche of projects Rodbaston (4MW), French Farm (4MW), Brackagh Quarry (6MW) and Barlborough (0.8MW) are currently undergoing project finance and will move to construction later this year. Additionally two further Bio-Power projects will be constructed during REG's next financial year.
Andrew Whalley, Chief Executive Officer, said:
"We are pleased to further strengthen our relationship with BlackRock through the sale of the Denzell Downs wind farm. The transaction provides REG with significant additional capital, with the proceeds to be invested in our portfolio of consented sites."
"This transaction supports our aim of building long term operational cash flows so that we are in a position both to return value to our shareholders through increased dividends whilst maintaining investment in the business."
Rory O'Connor, Managing Director at BlackRock said: