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EDP plan to sell Iberian power assets by 2022

Power News - Published on Thu, 14 Mar 2019

Image Source: Reuters UK
Reuters reported that Portuguese utility company EDP plans to sell 2 billion euros' (USD 2.3 billion) worth of assets in Portugal and Spain, and raise 4 billion euros via an asset rotation programme until 2022 to fund its expansion in renewable energy. EDP-Energias de Portugal is the largest Portuguese company by assets and is the target of a 9 billion euro takeover proposal by China Three Gorges. In a strategic update it also said it has earmarked 12 billion euros in capital expenditure between 2019 and 2022, with growth focused on North America and Europe.

It said that "We will generate over 6 billion euros of sale proceeds to reinvest in renewables and strengthen our balance sheet.”

That should help it achieve a 7 percent compound annual growth rate in net profit over the period, and 5 percent annual growth in earnings before interest, taxes, depreciation and amortization, which should finish 2022 above 1 billion euros and 4 billion euros respectively.

In its home market and neighbouring Spain, EDP plans to downsize its thermal and merchant power business. EDP's operations in Portugal account for 90 percent of electricity generation and distribution in the country.

Reuters reported exclusively last week that EDP was working on a plan to sell some of its assets in Portugal.

The utility has been running an asset rotation programme selling some assets to buy others that may offer potentially higher returns for a few years, mainly focused on wind power projects.

It expects to reduce its debt by 2 billion euros from end-2018's 13.5 billion by 2022, when its net debt to EBITDA ratio should be less than 3 times, down from 4 times currently.

The sale of the Portuguese assets also reflects some of the demands by activist investor Elliott, which has launched a campaign to try to thwart CTG's takeover proposal, but the "portfolio optimization" asset sale plan is somewhat below the 7.6 billion euros proposed by the shareholder.

Source :

Posted By : Rabi Wangkhem on Thu, 14 Mar 2019
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