Drax today announced plans to buy Opus Energy together with four Open Cycle Gas Turbine (OCGT) development projects.
The announcement came in a trading update that also said Drax expects full year earnings before interest, tax, depreciation and amortisation (EBITDA) to be “around the bottom of the range of current market forecasts”.
Drax said it has signed a conditional agreement to acquire Opus Energy for £340 million. Opus Energy currently has 8.3% of non-domestic business supply market share and supplies over 295,000 customer sites. A circular regarding the sale is expected to be sent to Drax’s shareholders in early 2017 for shareholders to vote on the acquisition, following which completion is expected to occur in early 2017.
The board of Opus Energy commented: “We are pleased to announce today that the shareholders of Opus Energy have unanimously agreed to accept Drax’s offer to acquire the whole of the Opus group subject to certain completion conditions.
Completion of the acquisition is conditional on the approval of Drax’s shareholders and the approval by the European Commission of the CfD Investment Contract awarded to Drax by the UK Government. Drax said it “remains confident of approval of this contract”. The acquisition will be fully debt funded through new facility, with robust sub-investment grade business model.
Drax will buy four OCGT projects with a total capacity of 1,200MW for an initial purchase price of £18.5 million, with final consideration dependent on clearing price in capacity market auctions. Two sites are in the 2016 capacity auction
Commenting on today’s announcement, Dorothy Thompson, chief executive of Drax Group, said: “Today we are pleased to announce the proposed acquisition of Opus Energy, the UK’s leading challenger retail supplier in the SME market, creating a strong and competitive presence complementing our existing Haven Power offer. We are pleased that five of our leading shareholders representing over 45% of the issued share capital have indicated that they will support the transaction, and we thank them for their support.”
She continued: “We are also announcing the acquisition of four OCGT development projects, which will play an important role in helping government meet their ambition of new gas generation, reducing carbon emissions, forcing more coal off the system, providing additional system support to ‘plug the gaps’ created by intermittent renewables and boosting security of supply. With the right conditions, we can do even more, converting further units at Drax to use sustainable biomass in place of coal. This is the fastest and most reliable way to support the UK’s decarbonisation targets, whilst minimising the cost to households and businesses.”
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