State will net €950m from Bord Gais sale
State will pocket €950m when Bord Gais sale is finalised. THE State will receive €950m from the privatisation of Bord Gais Energy, with the sale expected to close before the end of June. The sale will be made to a trio of investors made up of Centrica, Brookfield Renewable Energy Partners and Icon Infrastructure, who will break up the business once the deal is completed.
Bord Gais said that the full terms of the sale have been finalised, transaction documentation signed and said the enterprise value of the deal is €1.12bn. However, that figure includes some cash in the business and project debt tied to the Bord Gais renewable energy generation assets.
Allowing for those considerations the “cheque” that will be paid to the State will be €950m, according to a spokesman for Bord Gais.
For its share of the deal Centrica, which owns British Gas, will buy BGE’s gas and electricity supply business in the Republic which supplies 900,000 customers and the Whitegate gas-fired power station in a deal valued at €210m.
An estimated €60m of that is cash that will accrue to Bord Gais between the start of this year and when the deal closes, so the net price being paid by Centrica is €150m. Of that, €21m is a deferred payment that will be paid over three years subject to performance conditions being achieved.
Centrica is buying the Bord Gais and Bord Gais Energy brands, and the bulk of staff will transfer to Centrica.
Managing director of Centrica Ireland Eddie Collier said the new business would become an Irish subsidiary of stock market-listed Centrica.
Centrica has been criticised in its home market for raising gas prices, but Mr Collier said UK customers paid less than those here, and BGE would benefit from Centrica Group’s ownership of its own gas fields off the UK and Norwegian coast – which helps protect it from price shocks.
In financial terms, the biggest element of the deal is Canada’s Brookfield Renewable Energy Partners’ acquisition of 17 wind farms. The enterprise value of the wind assets is €700m, including the value of long-term non-recourse debt. The net purchase price to be paid to the State is €495m. Seventy employees will transfer from Bord Gais to Brookfield.
The third element of the deal is the sale of Firmus, which supplies gas to over 65,000 homes and businesses in Northern Ireland, to UK-based Icon Infrastructure.
Bord Gais Energy staff will transfer to the new group with their existing working terms and conditions. While much of the old Bord Gais is being sold, the Government will retain ownership of the natural gas network.
A deal with the Bord Gais employment share ownership scheme was announced last week, which will result in a €53m tax-free windfall split among 1,000 staff and former employees.