Danish energy firm DONG Energy has signed an agreement to sell the Severn gas-fired power station to a consortium of investors led by Macquarie Infrastructure and Real Assets (MIRA) for £350 million (€417 million; $574 million) in cash.
The agreement also includes an earn-out based on the future gross margin of the power station. The deal results in a booked pre-tax loss for DONG Energy of between DKK400 million and DKK500 million (€54 million; $74 million), which DONG said would not have any impact on EBITDA (earnings before interest, tax, depreciation and amortisation).
The Severn power station is located at Uskmouth near Newport in South Wales and generates electricity for Britain’s national grid. It has a capacity of 832 megawatts (MW), generates power for around 1.5 million British homes, and is described by DONG as “one of the most efficient natural gas-fired power stations of its type in the UK”. It commenced commercial operations in November 2010.
“We have succeeded in divesting the Severn power station at a satisfactory price in a difficult market,” said Thomas Dalsgaard, executive vice president at DONG Energy in a statement. “The divestment is an important element of the group’s strategy to divest non-core assets and thereby strengthen the capital base for the benefit of the future development of the company.”
In June this year, DONG Energy sold its onshore wind business to PFA, one of Denmark’s largest pension fund administrators, for an enterprise value of approximately €102 million.
Four months previously, it had published a new strategy and financial action plan which included an intention to divest DKK10 billion of non-core assets and focus its wind power business on offshore wind.