State to share in €136m Coillte will earn from sale of its stake in four wind farms

The State will share in the €136 million that national forestry company Coillte will earn from the sale of its stake in four wind farms to Greencoat Renewables.

Dublin-listed energy player Greencoat emerged on Tuesday as the winning bidder for Coillte’s stake in the operating wind farms.

Following news of the sale, Coillte chief executive Fergal Leamy said the State company would increase the dividend that it pays the Government next year. Mr Leamy did not say how much of the cash that Coillte earned from the sale would be returned to its shareholder.

The company paid an €8 million dividend to the State last year from the €30 million cash generated in its forestry and manufacturing operations.

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Greencoat’s bid topped a €125 million target that Coillte set when it put its stake in the wind farms on the market last March.

The company will buy Coillte's 50 per cent stakes in wind farms at Raheenleagh, Co Wicklow; Cloosh Valley, Co Galway; and Castlepool, Co Cork;, and 25 per cent of Sliabh Bawn wind farm, Co Roscommon. Between them they can generate up to 105 megawatts (MW) of electricity.

Coillte invested €25 million in the projects over the past four years. Including debt used to fund their development, the deal puts an “enterprise value” of €281 million on the businesses.

Mr Leamy said Coillte would use some of the proceeds to invest in its core forestry and timber board manufacturing businesses, to add more value to its operations, and in more energy projects.

Coillte plans to build 25 more wind farms on its land with the capacity to generate 1,000 megawatts (MW) of electricity over the next decade. In broad terms, one MW/hour of electricity can supply 1,000 homes for that period of time.

Suitable sites

Mr Leamy said the company was also likely to sell these once they begin generating power as its expertise lies in identifying suitable sites on its land and building the wind farms.

“We will develop them, but we would not operate them. That’s our model,” he said. “Once we are into trading electricity, we are out of our comfort zone to a certain extent.”

Greencoat Renewables raised €270 million in an initial public offering (IPO) last July, and a further €111 million in share placing three months ago. The latest deal will see its total installed capacity rise to 299 megawatts.

Coillte's portfolio was co-developed with Scottish utilities group SSE, ESB and Bord Na Móna, who each remain joint venture partners in their respective wind farms and retain certain rights in relation to the transaction.

Separately on Tuesday, Norwegian utility Statkraft agreed to buy all the output from the Castledockrell wind farm for seven years, marking its entry into the Irish market. The 41-megawatt wind farm was built in 2011 by Castledockrell Wind Group Ltd. – Additional reporting: Bloomberg