SPROGØ OFFSHORE WIND FARM (21 MW) SALES PROCESS AND HEADS OF TERMS

Size: px

Start display at page:

Download "SPROGØ OFFSHORE WIND FARM (21 MW) SALES PROCESS AND HEADS OF TERMS"

Cory Hutchinson
5 years ago
Views:

1 SPROGØ OFFSHORE WIND FARM (21 MW) SALES PROCESS AND HEADS OF TERMS 22 September 2017

2 Sales process A/S Storebælt invites to the sale of Sprogø Offshore Wind Farm ( Sprogø OWF ), a 21.0 MW offshore wind farm consisting of 7 Vestas V MW wind turbines, today owned 100 % by A/S Storebælt, through an asset sale and purchase agreement (the "Asset Purchase Agreement"). The sale will be carried out through a bidding procedure, as announced online at The bidding procedure is sequential and starts with the submission of non-binding indicative bids followed by submission of binding bids and final closing bid(s). The procedure is expected to be conducted in the course of 3 rounds, as illustrated in Figure 1. However, please note that A/S Storebælt reserves the right to change certain aspects of the procedure, such as the number of rounds of submission of binding bids and feed-back. Figure 1. Sales process and milestones For a party to participate in a specific bidding round it is required to have participated (and submitted a bid) in all preceding bidding rounds. Sprogø OWF will be sold to the party that makes the highest bid in the final bidding round. The sale is conditional on A/S Storebælt s acceptance of the final bid price and that the Danish Energy Agency ( DEA ) 1 consents to the transfer of Construction License 2 and the Power Production License 3 to the winning party. 1 In Danish: Energistyrelsen 2 In Danish: Etableringstilladelen 3 In Danish: Elproduktionstilladelsen - 2 -

3 Please note that bids must in whole be received by A/S Storebælt before the relevant deadline is reached. Any bids received after the deadlines stated above will not be opened or considered. The timeline includes a 3-month period from contract signing to closing. This period is expected to allow time for approval and transfer of the Construction License and the Power Production License as well as allowing the buyer to get an adequate handover of operational and financial processes prior to taking over the responsibility. Between contract signing and closing A/S Storebælt will allow the buyer to monitor day-today operations on Sprogø OWF. This includes using a reasonable level of internal resources from A/S Storebælt to ensure a successful handover. A/S Storebælt aims to operate the Sprogø OWF between time of contract signing and closing at the same high level as historically. As such if the technical state of the wind farm has deteriorated more during this period than can be expected from normal wear and tear during normal operation, the buyer shall be compensated accordingly. This assessment will be made by an independent technical advisor, e.g. the Danish Wind Owners' Association 4, through making inspections at these two points in time. The sale and following transfer of Sprogø OWF is conditional on consent from DEA regarding the transfer of the Construction License and the Power Production License to the winning party, as required by Danish law. In a written answer from DEA the requirements for a transfer of both licenses to a buyer are described as a collective requirement, which consists of providing a guarantee for decommissioning as well as having the necessary technical and financial resources to operate the wind park. The Power Production License is valid for 25 years from date of final commissioning of the wind farm (4 December 2009). DEA states in the license, that the license holder has an opportunity to renegotiate the terms of continued operation of the existing asset after expiry of the 25 years. To enable A/S Storebælt to assess if it is likely that the bidder can take over the Construction License and the Power Production License, bidders must enclose information to document the necessary qualifications required to obtain the 2 respective licenses. This information includes data on financial strength and technical qualifications based on track record of wind farm operations. 4 In Danish: "Danmarks Vindmølleforening"

4 Note it is nonetheless possible for investors without any prior experience in operations, maintenance and decommissioning of wind farms to be accepted to take over the 2 licenses. As long as they on equal terms with more experienced parties can provide satisfactory information to qualify living up to expected license requirements. External partnerships or service partners can make up for a lack of experience, internal resources or knowledge. A bid template for Round 1 is available in Appendix 1 to this document to ensure bidders are aware of the full information requirement. A bid template for the subsequent 2 rounds will later be sent out in or as documents to bidders relating to the sales process. In case of questions or uncertainties related to taking over of the Construction License and the Power Production License, bidders are themselves responsible for having a dialogue with DEA. However, A/S Storebælt and its advisor ESP Consulting can assist with providing any missing information related to Sprogø OWF that DEA may require during such a dialogue. Following Round 1 (non-binding indicative bids), A/S Storebælt reserves the right to disqualify bids from parties that: 1. A/S Storebælt assess unlikely to fulfil the necessary requirements set up by DEA to take over the Construction License and the Power Production License 2. By Danish or European law in any way is unfit or prohibited in trading with o The Danish state, or o Other Danish authorities, or o Businesses wholly or partly owned by the Danish state or any other Danish authorities or businesses. 3. Are excluded by the mandatory grounds for exclusion as described in the Public Procurement Act (lov nr af 15. December 2015; in Danish: Udbudsloven ) Please do however note Udbudslovens 138, which also apply regarding this bid procedure. The wind park will be sold as a whole asset to a single party. However, parties are welcome to join up and bid through a single entity. Given the high expected value of the asset as well as the operational and financial requirements that are associated with the asset ownership, A/S Storebælt expects that the buyer is a qualified professional investor. Heads of terms The following describes the heads of terms of A/S Storebælt s sale of Sprogø OWF. The asset will be sold as an independent asset where the following (hereafter the Asset ) will be transferred to the new owners balance sheet: - 4 -

5 7 Vestas V MW wind turbines located just off the northern coast of Sprogø 7 concrete gravity foundations for the above wind turbines and all machinery and equipment placed on these 7 DAVIT cranes (500 kg lifting capacity) placed on the above concrete gravity foundations 6 array cables connecting the 7 wind turbines 2 10 kv sea-cables, connecting the wind farm to the Disconnector Station on the north coast of Sprogø SCADA system Standard key system for tower doors All sea- and array cables are dug a minimum of 1 meter into the seabed. The sale of Sprogø OWF is conditional upon the following: A/S Storebælt's acceptance of the final bid price Consent from DEA to the transfer of the Construction License and the Power Production License The conclusion of an addendum to the existing framework operational contract regarding the power supply installations at Sprogø and related agreements concerning the technical operation of such installations as further described below SK Elnet owns the Sprogø Disconnector Station (hereafter the Disconnector Station ) and 10 kv cables between the Disconnector Station and the Sprogø Teknikbygning (hereafter the Technical Building ). SEAS-NVE owns some of the main grid components including the 60 / 10 kv-station and the 60 kv-cable from Sprogø to Lindholm (Funen), which is used to transmit the power from the wind farm to the electricity grid on Funen. After transfer of the Asset to the buyer, A/S Storebælt will assist the buyer s own technical employees and sub-contractors technical employees with access to the Disconnector Building and the Technic Building when needed to monitor meters etc

6 Contracts related to operation of the wind farm A/S Storebælt currently holds 5 contracts in relation to the operation of the windfarm. These are: Service contract for wind farm with MHI Vestas Offshore Wind Contract on vessel service with crew for offshore transport with Dansk Offshore Transport Power sales and ancillary services with Vindenergi Danmark Insurance policy with IF Skadeforsikring Framework operational contract for onshore grid on Sprogø signed by A/S Storebælt, SK Elnet, Fynsnet, Nyborg Elnet and SEAS-NVE and associated bilateral agreements between these parties The current service contract with MHI Vestas Offshore Wind requires A/S Storebælt to assist with at least 1 technician for MHI Vestas Offshore Wind s services in the period until 18 March The service contract expires on 18 March 2018, but has an option for an extension. A/S Storebælt is looking into the opportunities to extend the agreement until 31 December 2018 and assign the agreement to the buyer. Further information will be provided well in advance of the deadline for submitting the Round 1 bid. The offshore transport contract with Dansk Offshore Transport, expiring on 31 December 2018, will also be transferred to the new owner as part of the Asset Purchase Agreement, so that Dansk Offshore Transport will supply a crew vessel and captain for MHI Vestas Offshore Wind's service operations. The power sales and ancillary services contract with Vindenergi Danmark will be terminated by A/S Storebælt with effect from 1 June However, subject to closing the buyer has the option to extend and take over this contract. If the buyer wishes to exercise the option to extend the contract, the buyer must notify A/S Storebælt no later than Thursday 22 March Alternatively, the buyer is free to negotiate a new contract in the market or deliver the services themselves. If the power sales and ancillary services contract with Vindenergi Danmark is not extended and taken over by the buyer, the buyer must ensure that the responsibility for balancing is taken over by an authorised third party. The insurance contract with IF Skadeservice will automatically terminate by a change of ownership event. As such the contract will terminate at closing on 1 June The buyer can prior to this negotiate with IF Skadeservice about taking over this contract or alternatively enter into a contract with a different insurance company

7 The framework contract for onshore grid on Sprogø concerns the power supply installations at Sprogø and the technical operation of such installations during both normal operation and in the event of malfunctions of the grid. Whereas the framework contract concerns both installations concerning Sprogø OWF as well as other installations that e.g. A/S Storebælt will require for running the Great Belt Bridge following closing, the sale of Sprogø OWF is conditional upon the conclusion of an addendum to the framework contract that replaces A/S Storebælt with the buyer with respect to the power supply installations concerning Sprogø OWF while other rights and obligations of the parties remain unchanged. The addendum to the framework contract will include that following closing, the buyer and its subcontractors' technical employees will get access to the Disconnector Building and the Technical Building on a when needed basis to monitor meters etc. Finally, A/S Storebælt will during the period from closing until 31 December 2018 provide the buyer with access to Sprogø Harbour as service harbour of Sprogø OWF. Following 31 December 2018, the buyer will have to arrange for access to Sprogø OWF through another service harbour. Loan A/S Storebælt currently holds a mortgage loan from Realkredit Danmark with pledged security in the 7 wind turbines. The mortgage loan is a non-callable floating rate bond with semi-annual refixing, and the interest rate is fixed with a margin of 0.25 % to 6-month CIBOR with a current interest rate as per 1 July 2017 of 0.16 % (including margin) and a contribution margin to Realkredit Danmark of 0.45 %. The maturity of the underlying loan is 31 March A/S Storebælt will by default redeem this mortgage loan and arrange the release of the pledged security in the wind turbines no later than the day of closing. However, the mortgage loan up to a value of 60 % of the transaction price can be transferred to the buyer. The buyer must exercise this option no later than 22 March 2018 if they want to transfer the mortgage. If the buyer chooses to exercise this option, then the transfer of the mortgage will have effect from closing. A requirement to exercise this option is a credit approval from Realkredit Danmark and may not be a condition precedent to closing. A/S Storebælt undertakes no responsibility as to whether the required credit approval from Realkredit Danmark may be obtained by the buyer. The buyer can alternatively choose to transfer the mortgage to a mortgage loan in a different financial institution. The same deadline and conditions apply in this case

8 Any remaining financing in addition to the loan transferred to the new owner will be redeemed. Asset Purchase Agreement and payments The Asset Purchase Agreement is expected to be signed at time of A/S Storebælt s acceptance of the closing bid on 28 February Bidding is in the form of a cash amount to be paid with 40 % by contract signing to an escrow-account and 60 % immediately prior to closing to an escrow account and must be based on the tender material made public incl. the Asset Purchase Agreement which will be made available in Round 2. No other milestone payments and/or contractual obligations will be accepted. Bidding procedure All bids for Round 1 should be given on the bid template enclosed as Appendix 1. Notice of interest, all bids and all questions or inquiries relating to any matter of the terms of sale, sales process, assets, technicalities or other issues relating to the divestment process shall be directed to ESP Consulting. Further information During Round 1 all relevant information will be available online at the website (hereafter the Website ). This includes regular updates of Q&A. All received questions during Round 1 relating to the non-binding indicative offer will be anonymised and published with written answers on the Website. Q&A in subsequent bidding rounds will be anonymised and published with written answers in the data room. A/S Storebælt reserves the right to publish supplementary information on the Website during the sales process

9 Requests should be addressed to ESP Consulting Kronprinsessegade 6, København K For the attention of Holger Jensen Senior Consultant holger.jensen@esp-consulting.dk Michael Selchau Sanggaard Partner michael.sanggaard@esp-consulting.dk For A/S Storebælt København, 22 September 2017 Mogens Hansen, CFO - 9 -

10 Appendix 1: Sprogø Havmøllepark Round 1 bid template (nonbinding indicative bid) The undersigned (the Bidder ) gives an indicative bid for the Asset of DKK, Excl. VAT (price in Danske Kroner with 0 decimals). The bid is conditional on the Danish Energy Agency s consent to the buyer to take over the Construction License of 29 December 2008 ( Etableringstilladelsen ) and the Power Production License of 21 October 2009 ( Elproduktionstilladelsen ). The Bidder gives the following information to indicate the Bidder s qualifications to take over the Construction License of 29 December 2008 and the Power Production License of 21 October 2009, 1. The Bidder confirm that they are not excluded by the mandatory grounds as stated in Udbudslovens (yes): (If confirmation cannot be given for bullet 1, then adequate information regarding Udbudslovens 138 must be submitted along with the bid) 2. The Bidder currently holds license for offshore wind turbines in Denmark (yes / no)? 3. Current total ownership of wind turbines in the EU in MW: 4. If the Bidder currently doesn t hold license for offshore wind turbines in Denmark or has ownership of wind turbines in the EU, please describe the technical resources available to ensure the operation of the windfarm: 5. The Bidder can set up appropriate collateral for decommissioning the wind farm in line with the requirements in the Power Production License as either a deposit, bank guarantee or the like (yes / no)? 5 5 The cost of decommissioning is unknown, but an estimate can be found in the Information Memorandum. Note the disclaimer in the Information Memorandum regarding interpretation, liability, uncertainties etc. with numbers and estimates herein

11 6. Please attach documentation of ability to set up collateral or 7. Describe the source of collateral and how the Bidder will setup collateral for the estimated costs of decommissioning Information on Bidder Bidder s full name, CVR-registration number (or corresponding for non-danish bidders) and contact information for primary contact: Bidder s full name:, CVR-registration number: Primary contact full name: , phone:,, the Signature Place date Full name and title (Capital letters)

CALL FOR BINDING BIDS TO PURCHASE CLAIMS

CALL FOR BINDING BIDS TO PURCHASE CLAIMS Call for binding bids to purchase the claims which Družba za upravljanje terjatev bank, d.d., Davčna ulica 1, 1000 Ljubljana holds against the company A.D. ELEKTROTEHNA