IBERDROLA, the owner of ScottishPower, is selling its French wind farm business to a consortium led by American industrial giant General Electric for about €400 million (£326.4m) in its drive to cut debt and maintain an investment grade credit rating.
The world’s largest operator of wind farms said in October that it would sell some of its operations, slash investment and cut its workforce over the next two years to reduce its €32 billion debt pile by €6bn by 2014.
Iberdrola is one of several Spanish firms, including Repsol and Telefonica, that are battling to avoid the big credit downgrades that have hit the cash-strapped Spanish government and which make borrowing harder, and more costly.
In a statement to the stock exchange regulator yesterday, Iberdrola said Iberdrola Renovables France (IBRF), which directly or indirectly controls 32 onshore wind farms, would be sold to the consortium. Once the deal is completed, General Electric will own 40 per cent of the unit. MEAG, the asset manager of German insurer Munich Re, will hold another 40 per cent and EDF Energies Nouvelles, the renewable unit of France’s EDF, will own the remaining 20 per cent.
The total installed capacity of the French wind farms being sold is 321.4 megawatts. Iberdrola said the deal involved an initial payment of €350m and an additional payment of €50m subject to conditions. Some analysts think that Iberdrola might cut its dividend to preserve its coveted investment credit rating if the Spanish government fails to pay it back in full for years of selling power at discounted prices.
Standard & Poor’s left Iberdrola’s rating at just one notch above junk in November, citing concerns that the government might delay repaying power companies up to €24bn – a figure that the companies have racked up from selling electricity at a loss.
The French deal comes after the utility last week announced the sale of 20 per cent of its stake in the Medgaz pipeline, running between Algeria and Spain, for €146m. It is understood that the Spanish energy giant is also close to agreeing a deal to sell renewable energy assets in Poland for about €200m. It is also believed to have received offers for ten wind farms in the US. But the company is still pressing ahead with its business in the UK.
Before Christmas, its Glasgow-based wind division ScottishPower Renewables submitted a planning application for a 325 turbine offshore wind farm off the coast of East Anglia in a joint venture project with Swedish government-owned Vattenfall.
Last month, the Glasgow-based renewable energy division was granted £16.8m to develop plans for ten underwater turbines in a channel between the isles of Islay and Jura.
On Saturday, it emerged that Bolivia had nationalised two electricity distribution companies owned by Iberdrola. The country’s leftist president, Evo Morales, said the energy giant will be compensated according to a valuation to be drawn up by an independent arbiter.