Vattenfall has signed an agreement to sell Vattenfall’s lignite operations to a Czech consortium formed by EPH, an established European energy group, and its financial partner PPF Investments, which is an international finance and investment group focused on Central and Eastern Europe and Asia.
The sale includes all of Vattenfall’s lignite assets in Germany. Those are power plants Jänschwalde, Boxberg, Schwarze Pumpe and Vattenfall’s 50 percent stake in Lippendorf, as well as the open cast mines Jänschwalde, Nochten, Welzow-Süd and Reichwalde, and the recently closed mine Cottbus Nord.
The buyer will take over the lignite business, with all its assets, liabilities and provisions. The assets include cash amounting to a total of US$1.8 billion. The liabilities and provisions, including re-cultivation obligations, amount to a total of US$2.2billion.
Additionally, no payment of dividends or dissolution of any reserves or similar transactions is possible during the first three years. The two following years the possibility to extract cash from the business is limited by the agreement to profits from normal operations. Hedges that Vattenfall has made to secure the electricity price for the lignite operations will remain in Vattenfall at a value of US$1.1 billion.
Magnus Hall, Vattenfall’s President and CEO, said:
"Today we have signed an important deal for Vattenfall. This divestment of our lignite assets is good strategically but also financially given current and expected market conditions. We are now accelerating our shift towards a more sustainable production. The sale means more than 75 percent of our production will be climate neutral compared to about 50 percent today.”
“We want to reduce our CO2 exposure, so for us this is the right thing to do and it frees up resources to focus more on renewable energy. We see significant risks when it comes to the development of future electricity price levels. There are also regulatory risks to take into consideration.”
“We see growth opportunities in being the partner of choice for sustainable solutions for customers and cities. The number of our German customers is growing, today standing at more than 3 million. Starting from Berlin and Hamburg, we are also committed to offer an economically and environmentally attractive development and to further invest in partnerships with German cities.”