Sunpower completes 90% acquisition of China thermal plant for 293m yuan

ENVIRONMENTAL solutions company Sunpower Group has completed the acquisition of a 90 per cent equity interest in Changshu Suyan Thermal Power Co for some 293 million yuan (S$58 million), after adjustments based on due diligence conducted on the Chinese thermal plant. 

The majority stake was purchased from Jiangsu Geqiu Environmental Technology Co and another 11 shareholders, the mainboard-listed firm announced in a regulatory filing on Tuesday. 

Independent valuer Jiangsu Huaxin Asset Evaluation Co, which was engaged by the group, had valued the 90 per cent stake at about 347.3 million yuan, representing a 15.6 per cent discount to the deal amount. 

Sunpower claims that Suyan Thermal Power's sales revenue has grown steadily in the past three years, supported by the flourishing textile and garment industries in Changshu, Suzhou. 

In addition, demand is expected to increase significantly for Suyuan Thermal Power by 2020 due to the mandatory closure of small dirty boilers and the relocation of additional customers, the company said. 

According to Sunpower, Suyan Thermal Power is the exclusive steam supplier within its coverage area which includes the Yushan high-tech zone. It meets the bulk of steam requirements by the industrial facilities and supplies steam to 49 customers mainly in the printing and dyeing industries.

Barring any unforeseen circumstances, the acquisition is expected to have a positive impact on the group's performance for FY2019. 

"Based on enquiries of the local government, it is understood that several printing and dyeing companies in the surrounding area are planning to relocate to the coverage area of the target in the near future. This will further increase demand for steam for the target," the company said. 

Added Sunpower's executive chairman, Guo Hongxin: "This acquisition is an excellent example of how we are realising our medium-to-long term strategy of building a sizeable and valuable portfolio of GI (green investments) assets that is already our value creator and growth driver. Successful execution will generate substantial net present value of future cash flows and attractive double-digit investment returns for the group.

"With this acquisition, we will have eight operating GI projects contributing to the group's financial performance, as well as another five projects on the way, either at the construction and design stages, and a robust pipeline of projects under evaluation. The group is on track to invest 2.5 billion yuan in equity for its GI portfolio by 2021."