BlackRock to buy out UK onshore wind developer

REG is selling out to the US firm for £64.5m on the back of government subsidy cuts.

Onshore wind developer Renewable Energy Generation (REG) is being sold to BlackRock for £64.5 million ($96.3 million; €90.3 million) in another sign that government subsidy cuts are causing the UK renewable industry to suffer.

REG today announced having applied to delist from the London Stock Exchange’s AIM market following which, if approved at an extraordinary general meeting, a sale and liquidation would ensue. In a statement on the deal, the company pointed to the UK government’s “dismantling” of green incentives as having a “profound” impact on its business.

The wind developer, which owns 16 onshore projects generating 80.7 megawatts (MW), recommended that liquidators be appointed to oversee a liquidation process, with the majority of net cash proceeds to return to shareholders.

The initial amount targeted for distribution is expected to stand at about 60 pence per ordinary share, available around 29 January 2016. If necessary, there will be a final distribution of up to an additional 0.3 pence per ordinary share after liquidation completes. Initial liquidation payment will be 61.1 percent of the closing price of an ordinary share as of 8 October, the day immediately before REG announced it received BlackRock’s initial non-binding offer.

Another high-profile renewable energy company affected by the UK’s regulatory environment is Terra Firma’s Infinis. Citing fears about cash generation, growth prospects and reductions in power prices, Terra Firma decided to take Inifinis private in October, buying back a 30 percent stake in the company that produces 585MW of clean energy.

Before it took office, the UK’s Conservative party said in a pre-election manifesto it would “halt the spread of onshore wind farms” by cutting “any new public subsidy for them and [changing] the law so that local people have the final say on wind farm applications.”

Over the summer, the government began acting on its word by ending Renewables Obligation Certificates and reducing feed-in tariffs for onshore and ground-mounted solar projects. The feed-in tariff reductions, which targeted small-scale wind projects, hit REG especially hard since it operates projects that generate no more than 12MW alone.

While the UK ranks among the world’s largest offshore wind investors, it emerged in September that this sector may face subsidy cuts next. At a parliamentary debate, Energy Minister Andrea Leadsom raised the prospect of reviewing and possibly reducing subsidies for offshore wind generation in the future.