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Listing of Enefit Green dependent on purchase of Nelja Energia

Estonian news - eteap October 30, 2018

Baltic News Service. 30th of October, 2018

Listing Enefit Green, renewable energy company of the Estonian state-held energy group Eesti Energia, is not an objective on its own, but an opportunity to finance possible investments in renewable energy, such as the purchase of Nelja EnergiaHando Sutter, CEO of Eesti Energia, said.

“IPO is not an objective on its own, we have been given the opportunity to finance ourselves and raise capital via public issue of shares. If we need this capital, then we’ll use it. We will need it if we invest in renewable energy. The most likely transaction will be the purchase of Nelja Energia for which we are waiting for the decision of the Estonian Competition Authority,” Sutter said.

Hence, whether or not Enefit Green will be listed effectively depends on if the purchase of Nelja Energia is successful, otherwise there is no need to raise capital.

The plan to list 49 percent of Enefit Green’s holding stems from the coalition agreement. Although the first half of the year was initially on the table as time for a possible IPO, as a result of a legal dispute and delay surrounding the planned purchase of Tootsi wind farm, the plan for going public was also delayed.

Sutter said that if the plan to have 40 percent of the energy generated from renewable sources by 2022 did not pan out the way Eesti Energia had envisaged, an alternative plan would come into operation as the company would not give up its goal.

If Eesti Energia is unsuccessful at purchasing the Tootsi property and Nelja Energia, the company intends to go on to establish a gigantic offshore wind farm in the Gulf of Riga. However, in almost eight years, the company has yet to initiate proceedings for obtaining building rights for the planned 1,000 megawatt wind farm and quick developments in that regard are not expected in the near future.

“If we merge these companies [Enefit Green and Nelja Energia], then there are two offshore wind farm projects, which are both huge projects. They require a lot of preparatory work before we can speak of any decisions. The Hiiumaa wind farm suffered a small setback, which is nothing fatal, but the Planning Act and the practice are not entirely compatible. The legislator, too will need to make some amendments to reconcile them,” Sutter said.

The Eesti Energia renewable energy subsidiary Enefit Green at the end of May signed an agreement with Nelja Energia majority shareholder Vardar Eurus AS and minority shareholders whereby it would buy Nelja Energia for 289 million euros and would also take over Nelja Energia‘s liabilities worth 204 million euros.

After the acquisition of Nelja Energia, the amount of renewable electricity produced by Enefit Green will almost triple from the present 0.4 terawatt-hours to more than one terawatt-hour. Enefit Green last year produced altogether 372 gigawatt-hours of renewable energy.

Enefit Green owns four wind farms with a capacity of 111 megawatts, three cogeneration plants in Estonia and Latvia, one hydroelectric power plant and one solar power plant. Enefit Green produces energy from wind, biomass, water, mixed municipal waste and the sun.

The transaction requires an approval by Baltic competition authorities. The authorities of Latvia and Lithuania have granted their permission for Eesti Energia to buy Nelja Energia, the Estonian Competition Authority in July requested an extension to reach a decision which should be finalized at the beginning of November.

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