Pacific Energy agrees to buy Contract Power for $69m

26 March 2018 (Last Updated March 26th, 2018 15:18)

Pacific Energy has signed formal agreements to buy Contract Power Group, a provider to the remote energy generation sector.

Pacific Energy has signed formal agreements to buy Contract Power Group, a provider to the remote energy generation sector.

With an enterprise value of A$90m ($69m), Contract  Power has more than 25 years’  experience in the Australian build, own, operate (BOO) market, as well as in the EPC market, having completed projects in Australia, Africa, and Asia.

Contract Power has completed projects for clients including Tawana Resources and its joint venture partner Alliance Mineral Assets, Pilbara Minerals, Horizon Power, Galaxy Resources and Blackham Resources.

Pacific Energy will acquire the company through a transaction to be funded by A$85m ($65m) in cash and A$5m ($3.8m) in Pacific Energy shares.

The cash component will be funded from a NAZ-NAB debt facility of A$140m ($108m).

Pacific Energy managing director James Cullen said:  “The transaction with Contract Power gives Pacific Energy significantly more scale and reach, now with over 30 long-term power generation contracts for remote mines and townships and a weighted average remaining contract duration rising above four years across the entire portfolio.

“This provides us with stronger and longer earnings visibility. I am very excited for our shareholders and staff and greatly look forward to working with Leon and his team.”

“This provides us with stronger and longer earnings visibility.”

Subject to several conditions, the acquisition is expected to be completed by the end of this month or early April.

With significant experience in remote diesel and gas power generation, as well as renewables, Contract Power’s end-users include mining projects and remote townships.

The company has 82MW of installed power generation, as well as additional power generation assets, stock and equipment available for use.

The acquisition will allow Pacific Energy the opportunity to expand its presence in the growing BOO market, as well as consolidate its position with 245MW of contracted capacity across 16 sites.

Contract Power founder and owner Leon Hodges said: “During the due diligence process it became very clear that the high standards, quality and culture of the KPS and Contract Power businesses were remarkably similar.

“I am looking forward to continuing to drive the business with our team and the support of Pacific Energy’s resources and I am also excited about becoming a Pacific Energy shareholder. This is certainly a landmark transaction in our industry.”