US Solar Fund sells Mount Signal 2 purchase option to MN8 as part of New Energy’s proposed deal

ASX-listed New Energy Solar is proposing to sell its portfolio of 14 US solar assets to MN8 Energy (MN8) for US$244.5m (€236.8m) with a plan to delist and wind up the company once the deal is approved.

Last year, New Energy implemented a number of strategic initiatives, including the sale of its Australian assets; a share buyback; and a return of capital, to help address the discount at which its shares had traded on the Australian stock exchange.

Despite these measures, the trading discount persisted, and in February 2022 the board announced a sale process for its US asset portfolio.

The process resulted in the board recommending that the company ”proceeds with the disposal which will enable all shareholders to achieve a significant premium to the pre-exclusivity price and represents the most attractive course of action” for New Energy.

In a separate announcement, US Solar Fund (USF) said it has sold a purchase option over its 50% interest in its 200MW Mount Signal 2 (MS2) to MN8, the renewable energy business formerly known as Goldman Sachs Renewable Power.

USF said with New Energy announcing the sale of its US portfolio to MN8, including its 50% interest in MS2, USF believes this is an attractive opportunity for USF to realise the value in the MS2 investment.

The option structure allows MN8 to complete the acquisition of USF’s 50% interest after their acquisition of New Energy’s 50% while providing price certainty to USF.

Under the terms of the option, MN8 will pay USF a non-refundable option fee of US$1m and will have the option, for an initial term of six months extendable for a further three months by mutual agreement, to acquire USF’s 50% interest in MS2 for an additional US$52.2m excluding working capital.

Liam Thomas, CEO of USF’s investment manager, said: “We’re pleased to agree this option with a high-profile renewable energy business like MN8, and we believe it is a win-win for USF.

”If exercised, it will monetise a significant existing asset at its current carrying value. If not exercised, it delivers an incremental $1m of value in the current financial year.”

Should the sale proceed, USF will use the proceeds for new investments, working capital, and/or future capital management, the company said.

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