Allco Finance Group has sold its US wind project for US$325 million ($430 million), as part of a programme to sell assets and use the proceeds to pay down debt.
Allco and a consortium comprising the United States-based ArcLight Capital Partners and Terra-Gen Power agreed to the saleand purchase of the assets yesterday.
The assets include a 3100MW wind development project in Tehachapi, California, one of the largest wind development projects in the world.
"This sale has delivered to Allco and its co-investment partners a highly profitable outcome in a relatively short time frame, a result of Allco's decision two years ago to establish its global wind energy business," said Allco head of infrastructure Nick Bain.
Allco's after-tax share of the sale proceeds is expected to be about A$165 million ($206 million), which it will use to further pay down senior debt facilities with its banking syndicate.
On closing the sale, Allco said it would be released from certain letter of credit obligations totalling A$65 million.
Allco's corporate senior debt and contingent commitments are expected to be reduced by approximately A$230 million in total as a result of the sale, based on current exchange rates. Allco shares were up A10.5c or 36.21 per cent at A39.5c by 1.08pm Sydney time.
Allco's drawn borrowings and contingent commitments under its senior debt facilities is A$935 million.
As a result of the Tehachapi sale and other asset sales, Allco will be targeting a senior debt level of A$675 million by July 31.
The sale is subject to certain regulatory approvals which are expected to be satisfied by the end of next month.
The Tehachapi wind development project is the largest single wind development in the US under one controlling entity.
The project is supported by a landmark 1550MW power purchase agreement with Southern California Edison that was negotiated and announced by Allco in December 2006.
Tehachapi is one of the main wind zones in California.
California has set a 20 per cent requirement for renewable energy by 2010, and a recommended target of 33 per cent by 2020.
