Portugal buys into US energy

Australian
Thursday 29/3/2007 Page: 26

Energias de Portugal, the country's dominant electricity group, is to pay Goldman Sachs $US2.9 billion ($3.6 billion) in cash for 100 per cent of leading US utility Horizon Wind Energy in the world's biggest renewable energy deal to date.

EdP chief executive Antonio Mexia said the acquisition would transform it into the world's third largest wind power producer and a global leader in renewable energy, with 9 per cent of the rapidly growing US wind generation market.

Horizon, which will have 1324 megawatts of installed wind capacity in 15 US states by year's end, was acquired by Goldman Sachs in 2005, when called Zikha Renewable Energy, and has been put up for sale.

EdP said it won the bid against top international energy groups and infrastructure funds. The deal gives Horizon an equity value of $US2.3 billion and covers a net financial debt of $US180 million. Adjustments for capital expenditures amount to an additional $US600 million. EdP said it would raise $US2.5 billion of the total $US2.9 billion investment through debt. The remainder would be financed through tax equity, the selling on of tax credits due to Horizon.

The Portuguese group said the acquisition would lift average growth in earnings before interest, tax, depreciation and amortisation from an estimated 11 per cent a year to 13 per cent from 2005 to 2010. Growth in earnings per share would be stable at 14 per cent a year.

Mr Mexia said investments planned by Horizon would lift the US company's current wind power capacity to more than 9000MW by 2020. EdP hoped to increase its share of the US market from 9 per cent to 12 per cent over the next four years. EdP plans to increase investment in wind energy over four years to 6.2 billion, up from a previous target of 2.7 billion.