Sunpower eyes equity buys in thermal power firm, electricity trader

SUNPOWER Group is set to buy out a thermal power company and a significant equity stake in an electricity trader.

Its subsidiary, Jiangsu Sunpower Clean Energy Co, has penned two share transfer agreements with Hengtong Group.

The first agreement is for 100 per cent equity interest in Zhangjiagang Yongxing Thermal Power Co to be transferred to Sunpower at a purchase consideration of 765 million yuan (S$157 million).

Zhangjiagang Yongxing is "the defacto exclusive steam supplier to facilities within the coverage of its steam pipeline".  This ensures the long-term recurring demand for the steam it supplies, Sunpower said.

Sunpower will pay 50 million yuan as deposit within five days from signing the agreements.

The second agreement calls on Sunpower to purchase a 40 per cent equity stake in Jiangsu Hengtong Electricity Sales Co at a consideration of eight million yuan.

With the electricity sales licences held by Jiangsu Hengtong, Sunpower said that it will be able to procure electricity generated by other co-generation plants at a lower cost for sales to local end-users at a higher price.

The first agreement for all equity in Zhangjiagang Yongxing is conditional on the steam supplier meeting agreed targets on its audited net income after tax for FY16 and FY17.

The second agreement is conditional on Sunpower proceeding with the acquisition of Zhangjiagang Yongxing.