TCW acquires UK wind farm stakes

The US asset manager has bought a 50% stake in three UK wind farms owned by Centrica, the parent company of British Gas. As well as an £84m cash payment from TCW, a consortium of banks is providing £340m of project finance facilities.

Centrica, the owner of British Gas, said today that it had agreed to sell a 50 percent interest in three of its wind farms to US investment manager TCW.

TCW, which is a subsidiary of Société Générale Asset Management, is to pay Centrica £84 million (€94 million; $138 million) in cash for the stake in the Lynn and Inner Dowsing wind farms off the Lincolnshire coast, and the Glens of Foudland on-shore wind farm in Aberdeenshire.

Wind: powering
UK dealflow

As well as the cash payment, the two firms have agreed to raise around £340 million of non-recourse project finance facilities from a banking consortium. The banks involved in the transaction are Bank of Ireland, Bank of Tokyo-Mitsubishi UFJ, Bayern LB, BBVA, BNP Paribas Fortis, Calyon, Dexia, HSBC Bank, KfW IPEX Bank, Lloyds TSB Corporate Markets, National Australia Bank, NIBC Bank, RaboBank and Santander.

TWC is making the investment through two of its managed investment funds: the $2.6 billion TCW Energy Fund XIV and the €354 million TCW European Clean Energy Fund. All together, the firm has about $6.2 billion in assets under management or committed to management, according to the TCW website.

Centrica said the transaction values the three wind farms at a combined £460 million. It added it expects to make a profit of around £50 million on the disposals of the wind farms, which reported an operating profit in 2008 of £17 million.

Through its subsidiary, British Gas, Centrica is to sign a 15-year power purchase agreement with TWC to off-take all the electricity production of the three wind farms. Centrica said financial close on the project finance facilities is expected to occur next month, with closure of the equity sale expected before year end, subject to European Commission approvals.

Centrica also said it had received final investment approval to carry out its 270-megawatt Lincolnshire off-shore wind farm project. Construction on the scheme, in which Centrica will invest around £725 million, has been scheduled to start in 2010.