Tilt Renewables has signed a 15-year supply deal with Victoria’s state government for the company’s proposed Dundonnell wind farm.
Earlier today, the stock was put in a trading halt pending an announcement on support arrangements for the planned 80-turbine wind farm. This afternoon, Tilt said it had accepted an offer from the Victorian Government for about 37 percent of the output from the fully permitted wind farm.
That deal – effected through contracts for differences – gives it enough certainty to progress the 336 MW project to a final investment decision for financial close, which it expects to make in late 2018. Construction would begin early next year and be completed by mid-to-late 2020.
Melbourne-based Tilt said it will proceed to financial close without support agreements for the rest of the project’s output, but will keep pursuing contracts for the uncontracted supply after that. The wind farm is now expected to cost A$560 million, down from the earlier A$600 million estimate. Tilt has bank funding for A$300 million and had planned a A$300 million equity raising, which it has now reduced to A$280 million.
Major shareholders Infratil and Mercury NZ had previously committed to meet their 77 per cent share of any equity raising. They are seeking to take over Tilt, pooling their stakes into a new entity and offering $208.5 million, or $2.30 a share, to minority shareholders. Tilt’s independent directors last week recommended investors reject the bid as being too low and not recognising the firm’s pipeline of future projects. Infratil insists it’s a fair and reasonable deal.
“The Dundonnell project is a significant investment opportunity for Tilt Renewables, increasing our operational generation capacity to just under 1GW, further confirming the value of our development pipeline and the execution capability of our team, plus cementing our position as a market leader,” chief executive Deion Campbell said.
“In addition to providing attractive shareholder returns, the project will materially extend the average remaining operating life of our turbine fleet, provide further geographic diversification and deliver a wide variety of community and environmental benefits.”
The shares last traded at $2.31, unchanged from before the announcement.