AUCKLAND: Mercury NZ Limited, together with Powering Australian Renewables (PowAR), has entered into a Scheme Implementation Agreement to acquire Tilt Renewables Limited.
Under the terms of the transaction, PowAR will acquire all the shares of Tilt (including Mercury’s shares) for NZ$7.80 per share, and Mercury will acquire all of Tilt’s New Zealand operations, including development options, for an enterprise valuation of approximately NZ$770 million.
Mercury Chief Executive Vince Hawksworth acknowledged Tilt’s successful renewable energy generation development programme in New Zealand and Australia, which he said reflected great work by the team at Tilt over the past five years.
“Mercury is excited to have partnered with PowAR to make this compelling offer for Tilt,” Mr Hawksworth says.
“Throughout this transaction, Mercury has worked to keep these New Zealand assets under New Zealand ownership. Completion of this transaction will position Mercury to make an even more significant contribution to New Zealand’s de-carbonisation goals.
Tilt’s New Zealand wind operations combined with our Turitea windfarm, which is currently under construction, would represent almost 5% of New Zealand’s total generation.
Mercury’s decision to invest in Tilt in 2018 has made this transaction possible and it will be immediately earnings accretive for MCY shareholders,” Mr Hawksworth says.
PowAR Chairman Cheryl Bart said: “Tilt has built a world-class portfolio of high-quality renewable energy assets and development opportunities that will complement our existing assets.
We’re delighted to be able to work constructively with Tilt and Mercury NZ on this exciting opportunity, which is absolutely aligned to our mission of leading the transition to a decarbonised, decentralised and digitised energy system.”
The acquisition of the New Zealand operations by Mercury will be funded from the sale of Mercury’s 19.9% Tilt shareholding, worth NZ$585m and net debt of NZ$185m and are forecasted to lift Mercury’s earnings (EBITDAF) in FY2022 by $50m.
The acquired Tilt assets will increase Mercury’s total annual generation by over 1,100GWh and include several prospective development options.
Mercury notes that:
• the Tilt Board has recommended shareholders vote in favour of the Scheme subject to the scheme consideration being above or within an Independent Adviser’s valuation range and in the absence of a superior proposal (as defined in the SIA)
• Infratil Ltd, which owns 65.5% of Tilt, has entered a voting deed to vote its shares in favour of the Scheme.
In addition to Tilt shareholder approval, the Scheme is conditional on High Court approval, and regulatory approvals which are expected within approximately 4 months.
PowAR was established in 2016 as a partnership between AGL and QIC on behalf of its managed clients QGIF and the Future Fund. The partners are long-term investors and have significant combined institutional capital with incumbent retail energy expertise as follows:
• QIC: independent investment manager owned by the Queensland Government with over A$85 billion in assets under management (as at 31 December 2020);
• Future Fund: Australia’s sovereign wealth fund with over A$160 billion under management; and
• AGL: leading ASX-listed integrated energy business with over 4 million customers and a 11GW+ generation portfolio.
PowAR’s current assets include the 199 MW Silverton Wind Farm, 102 MW Nyngan Solar Plant and
53 MW Broken Hill Solar Plant in New South Wales as well as the 453 MW Coopers Gap Wind Farm in Queensland.
Mercury, together with its subsidiaries, is an electricity generator and energy retailer in New Zealand. As a retailer of electricity and gas, Mercury currently services the energy needs of residential, commercial and industrial customers. Mercury is listed on the NZX Main Board and has a foreign exempt listing on the ASX. As at close of the Business Day on 11 March 2021, it had a market capitalisation on the NZX of approximately NZ$8.0 billion.