June 24, 2014 / 7:41 AM / 4 years ago

gm UPDATE 2-KKR buys $567 mln stake in wind farms unit of Spain's Acciona

(Adds further details, background)

By Jose Elías Rodríguez

LONDON/MADRID, June 24 (Reuters) - Private equity firm KKR is to buy a one-third stake in indebted Spanish group Acciona’s international wind farms arm for 417 million euros ($567 million), the companies said on Tuesday, with a view to listing the business next year.

Acciona and other Spanish renewable power generators have shed assets over the last two years to cut debts after the government made a U-turn in energy policy and slashed subsidies for renewable power, a move that has particularly affected profits at Acciona’s Spanish wind farms, which are excluded from the KKR deal.

The KKR purchase gives Acciona Energia International (AEI) an enterprise value of 2.6 billion euros, with half that value in equity and half in net debt, said the companies, with AEI’s operating assets amounting to 2.3 gigawatts of wind power capacity across 14 countries including the United States, Italy and South Africa.

Acciona said other funds had competed for the assets in a deal handled by Lazard investment bank.

Once the deal closes late this year the companies intend to launch a public share offer in the first half of 2015 for a vehicle that will hold all or part of AEI’s assets.

The public offer will be for a so-called yieldco vehicle, similar to Abengoa Yield, the recently listed U.S. subsidiary of another Spanish firm, Abengoa.

Yieldcos usually own and operate the generating assets of their parent companies and have long-term output purchase agreements with power utilities, thereby guaranteeing a stable cash flow that can be paid out in dividends.

“The first half of next year is a realistic time frame (for the share launch)... and in principle AIE will continue to be the majority shareholder of the yieldco,” Juan Muro Lara, general director of corporate development for Acciona, told reporters at a news conference on Tuesday.

KKR said it could put some of its other international renewables assets into AEI.

“We haven’t talked about the issue as part of this transaction, but we don’t rule it out if it makes sense,” said Jesus Olmos, head of KKR infrastructure in Europe and of KKR’s operation in Spain.

“The French assets, or the Canadian or U.S. assets could become part of AEI, either for management or ownership,” Olmos said at the news conference.


Acciona said the KKR deal would reduce its own debt although it could use the proceeds from the sale to invest in projects. The company ended March with 5.9 billion euros in debt, down from 6 billion euros at the end of 2013.

Acciona’s earnings before interest, tax, depreciation and amortisation dropped 19 percent in the first quarter of 2014 to 226 million euros, mainly due to the subsidy changes.

Shares in Acciona were up 3 percent at 66.79 euros by 1258 GMT.

In a research note Spain’s Sabadell bank said the deal was positive strategically and would enable the division to grow, although the implied enterprise value of 2.563 billion euros for AEI was below its own estimate of 2.7 billion euros. ($1=0.7357 euros) (Additional reporting by Freya Berry; Writing by Fiona Ortiz; Editing by Mark Potter and Greg Mahlich)

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