Scatec Completes Wind Farm Sale to Advance Renewable Portfolio
Scatec ASA Announces Sale of Wind Farm in Vietnam
In recent developments, Scatec ASA has entered into a significant agreement involving its Dam Nai Wind farm, a prominent renewable energy asset in Vietnam. The company has decided to sell this 39-megawatt (MW) wind facility along with the operating company to Sustainable Asia Renewable Assets, a part of the SUSI Asia Energy Transition Fund.
Details of the Transaction
Scatec is set to receive an upfront payment of USD 27 million for its complete equity stake in the wind farm upon the deal's completion. Additionally, the company may receive earn-out payments, which could reach up to USD 13 million, depending on specific future conditions. This strategic move aligns with Scatec’s broader goal of optimizing its portfolio and determining its focus on market opportunities that present better growth prospects.
CEO Insights
Commenting on the sale, Scatec's CEO, Terje Pilskog, remarked on the company’s decision to exit Vietnam after managing the Dam Nai wind farm since acquiring SN Power in 2021. He expressed satisfaction with the agreed sale price and confidence in SUSI's capability to continue enhancing Vietnam's renewable energy initiatives. Pilskog acknowledged the contributions of the local teams, stakeholders, and partners during their ownership.
Financial Implications of the Sale
The financial aspects of this transaction reveal an estimated enterprise value of USD 68 million, including the contingent earn-out payment. The wind farm’s net interest-bearing debt approximated USD 28 million by the end of the second quarter of 2024. Since establishing ownership in 2021, the asset has provided roughly USD 14 million in cash flow to equity.
Subsequent Actions Planned by Scatec
Scatec anticipates that the deal will be finalized within the first half of 2025, contingent upon customary regulatory approvals. This transaction is also expected to yield an accounting gain of approximately USD 8 million, reflecting Scatec's proportionate and consolidated financial standing, and a fair value estimate of the contingent payment. However, post-transaction, Scatec will incur exit costs estimated at around USD 4.5 million due to the wind farm's operational cessation in Vietnam, which will be documented in their third quarter results for 2024.
About Dam Nai Wind Farm
The Dam Nai Wind farm is a notable infrastructure project featuring 15 Siemens wind turbines, rounding up to a total capacity of 39 MW. This facility is located in Ninh Thuan province, a region known for its potential in renewable energy production.
Historical Context
Initially, Scatec Solar Netherlands B.V. acquired SN Power Vietnam Renewables B.V. in May 2021, leading to the establishment of Dam Nai Wind Joint Stock Company as a wholly owned subsidiary. Furthermore, in February 2020, Scatec Solar Solutions Vietnam Co., Ltd was launched as a fully owned Scatec entity through its parent company.
The Road Ahead for Scatec
As Scatec looks to optimize its operations and geographical focus, it remains dedicated to expanding its renewable energy ventures across diverse markets. With a portfolio of 4.7 gigawatts in operation and under construction, the company continues to lead in the development of sustainable energy solutions globally.
Frequently Asked Questions
What is Scatec ASA's recent business decision?
Scatec ASA has decided to sell its Dam Nai Wind farm in Vietnam to SUSI Asia Energy Transition Fund as part of a portfolio optimization strategy.
What are the financial benefits for Scatec from this sale?
Scatec will receive an upfront payment of USD 27 million, with potential additional earn-out payments of up to USD 13 million, along with a projected accounting gain of USD 8 million.
Why is Scatec exiting Vietnam?
The exit aligns with Scatec's focus on markets that present more attractive growth opportunities, following their management of the wind farm since 2021.
When is the expected closing date for the transaction?
The transaction is anticipated to be finalized within the first half of 2025, pending regulatory approvals.
What is the future outlook for Scatec ASA?
Scatec aims to continue expanding its renewable energy capacity, focusing on strategic regions and opportunities for sustainable growth.
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