China WindPower divests equity Interest in Guazhou Wind Power Project

Sale to Jilin Power generated gain of HK$198.6mn and presented a good opportunity for the Group to realise part of its investment in the project at a reasonable price.

China WindPower Group Limited (“China WindPower”), an integrated wind power company in China, announced that it has entered into a Disposal Agreement to divest its 46% and 5% equity interest in Gansu Guazhou Century Concord Wind Power Co. Limited (“Guazhou Company”) to Jilin Power Share Co., Ltd. (“Jilin Power”) and Jilin CPI Gether New Energy Co., Ltd. (“Jilin Xiehe”) respectively at a consideration of RMB446.3 million (equivalent to HK$533.3 million) and RMB48.51 million (equivalent to HK$58 million) respectively. The aggregate consideration of the Disposal Agreement is RMB494.8 million (equivalent to HK$591.3 million), according to a China WindPower report.

Guazhou Company is mainly engaged in the investment and development of wind power projects, including the Guazhou wind farm and the transformer station, in Guazhou County, Jiuquan City, Gansu Province, China. The disposal of the Guazhou Company project is the Group’s first wind farm project sold after being put into operation. It has brought a disposal gain of HK$198.6 million to the Group with an equity premium of approximately 45%. The proceeds from the disposal are to be used as general working capital of the Group and investment in wind power projects.

Jilin Power, one of the purchasers, is listed on the Shenzhen Stock Exchange. It is principally engaged in the development, investment, construction, production and sale of thermal power, hydropower, heat, industrial gas and other new energy resources. It is also involved in the maintenance and provision of services to power stations, the provision of technical consultancy services to electrical power projects as well as the purchase and sale of coal and other fuels.

Jilin Xiehe, the other purchaser, is a subsidiary of China WindPower which holds 49% equity interest in the former. After the completion of the two transactions, the Group would effectively hold a 51.45% interest in Guazhou Company which would be accounted for as a jointly controlled entity.

Mr Liu Shunxing, Chairman and CEO of China WindPower, said, “We have started to execute an optimized operating strategy last year in which we would gradually develop and build more sole-owned wind power plants each year, and sell down a partial equity stake of the sole-owned wind power projects after the plants are put into operation. Compared to the joint-venture business model in the early stage of the project, the new operating strategies will gain higher returns and will bring the Group’s rich wind power resources and strong developing and constructing wind power plants capability in full play. We aim to dispose 100 to 150MW of equity interest in wind power plants to power plant operators or financial investors at a target equity premium of 25% to 60% each year. This strategy enables us to enhance cash flow and profit and accelerate the investment and development of wind power projects with collaboration through sharing expertise, experience and resources.”

“The disposal presented a good opportunity for the Group to realise part of its investment in the Guazhou Wind Farm Project and the Transformer Station at a reasonable price. The partnership with Jilin Power to jointly run the project would also generate synergies. The Group will continue to enjoy a share of the return from the project through its ownership stake.” Mr. Liu concluded.