Viridian's owner seeks January bids for business
Published 03/12/2015 | 02:30
Viridian's owner Arcapita is seeking first-round bids for the Northern Ireland-based energy supplier to be tabled next month, according to two people with knowledge of the matter.
In September the Irish Independent reported that Arcapita was looking to sell the Irish business for at least €1bn.
Arcapita, which is being advised by Evercore Partners in London, has called for bids by January 15, a source said.
The yield on Viridian's 2020 bonds fell yesterday, extending a decline of more than 1 percentage point since September 29, when this newspaper reported the Belfast-based company could be sold.
A spokesman for Viridian declined to comment, while officials at Arcapita didn't respond to a request for comment.
Viridian, which was bought by Arcapita in 2006, is likely to attract interest from Centrica, according to Joseph McGinley, an analyst with Davy. Centrica led the consortium that bought Bord Gáis Energy from the State last year for €1.12bn, and the UK business now operates its consumer unit. A spokesman for Centrica declined to comment.
In Northern Ireland, Viridian owns Power NI, where it supplies electricity to about 610,000 homes and businesses.
In the Republic, Viridian owns Energia, which supplies electricity to the domestic and commercial market and which includes the Huntstown Power Station in Dublin.
The ESB, the biggest energy supplier on the island of Ireland is seen as unlikely to bid for any Arcapita assets, but industry sources say Virdian could be looked at as a break up opportunity by a consortium that could split its power generation, supply and consumer units.
The yield on Viridian's 2020 bonds fell as low as 6.74pc yesterday, the lowest since April, from 6.85pc on Tuesday. Davy's McGinley said a sale or initial public offering should provide a "stronger buffer" for senior debt holders, helping tighten the yield on Viridian's bonds. He said Arcapita would probably get more value from an IPO of Viridian than a sale.
Arcapita filed for Chapter 11 protection in the US in 2012 after talks with creditors over a syndicated loan failed.
According to Viridian's latest annual report, Energia had 61,300 commercial customers at the end of March, most of them for electricity. It had 56,000 domestic customers, with 26,000 of those buying both electricity and gas from the company.
Energia's revenue fell to £893.5m (€1.2bn) in the last financial year from £1.01bn, while pre-exceptional earnings before interest, tax, depreciation and amortisation (EBITDA) fell to £65.1m from £70.8m. Energia also owns two power plants in north Dublin.
On a group basis, Viridian generated revenue of £1.46bn in its last financial year, compared to £1.6bn a year earlier. Operating profit was unchanged at £77.1m. Industry journal 'Sparkspread', which first reported the planned sale, said that Arcapita ran a beauty parade of potential advisers earlier in the year. (Additional reporting Bloomberg)