(Alliance News) - Electrical power station operator Drax Group PLC on Tuesday said it has agreed to sell the four combined cycle gas turbine power stations that make up Drax Generation Enterprise Ltd to VPI Holding Ltd for GBP193.3 million.
This includes GBP29.0 million in contingent consideration related to the option to develop a new plant at Damhead Creek.
Drax said the power stations have performed well since being acquired at the end of 2018, but they don't form part of its renewable generation strategy. The sale price represents a premium to book value, Drax said.
"By focusing on our flexible and renewable generation activities in the UK we expect to deliver a further reduction in the group's CO2 emissions, which should accelerate our ambition to become not just carbon neutral but carbon negative by 2030," said Drax Chief Executive Officer Will Gardiner.
Drax said that DGEL also holds the group's pumped storage and hydro assets and is a shareholder in SMW Ltd, the owner of the Daldowie fuel plant near Glasgow. The Daldowie plant turns sludge into fuel pellets. These other assets will be transferred out of DGEL before the transfer to VPI and kept by Drax.
The company also provide a trading update on Tuesday. A robust recent performance means its expectations for 2020 adjusted earnings before interest, tax, depreciation and amortisation remain in line with market expectations, which Drax put at GBP397 million. This would be down 3.2% from GBP410 million in 2019. It said it continues to expect to pay an annual dividend of 178.1 pence, up 7.5% on 2019.
Drax shares were up 4.4% at 344.58 pence in London on Tuesday morning.
By Tom Waite; thomaslwaite@alliancenews.com
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