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SEE is selling energy services unit to OVO
Posted on Friday, 13 September 2019 08:32
UK-based energy producer SSE is selling its energy services business to OVO Energy for GBP 500.00 million in a bid to reduce its debt pile.
Under the terms of the deal, the acquiror will pay GBP 400.00 million in cash and GBP 100.00 million in loan notes; however, an amount of GBP 59.00 million will be deducted from the consideration reflecting debt like items.
On completion, SSE will receive the loan notes issued by a member of the OVO group due in 2029, unless prepaid earlier with an annual interest rate of 13.3 per cent payable in kind.
Closing is subject to certain regulatory approvals including from the Financial Conduct Authority and the Competition and Markets Authority and is expected in late 2019 or early 2020.
Allistair Phillips-Davies, chief executive of the vendor, said: “Following the transaction, SSE will be able to give an even greater focus to delivering the low carbon infrastructure needed to help the UK reach net zero emissions.
“We have a clear strategy around developing, operating and owning renewable energy and electricity network assets, along with growing businesses complementary to this core.”
SSE has a large “renewable energy pipeline and a leading position in the electricity networks”.
The energy services group is billed as the third-largest supplier in the UK energy market, with around 3.50 million household customers and 8,000 employees.
As well as electricity and gas, the unit provides telephone, broadband, metering, boiler installation and maintenance services.
In the 12 months to 31st March 2019, SEE Energy Services generated operating profit of GBP 89.60 million, with reported pre-tax profit at GBP 35.30 million.
The deal is expected to have no immediate impact on customers after completion, with the brand to be operated under OVO’s licence for a period allowing time for a phased and managed migration.
SSE has made a couple of other sales this year, including a 50.0 per cent stake in its telecommunications business for GBP 380.00 million in April, a 49.9 per cent interest in the Stronelairg Wind Farm and the Dunmaglass Wind Farm for GBP 635.00 million in March and its water unit for an undisclosed amount in June.
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