GCP Infra offloads Blackcraig Wind Farm assets for £31m

GCP Infrastructure Investments announced the successful disposed of its interest in loan notes secured against the Blackcraig Wind Farm in Dumfries and Galloway, Scotland on Friday.

The FTSE 250 company said the disposal was at a 6.4% premium to the project's valuation as of 31 March.

It said the Blackcraig Wind Farm, boasting a capacity of 52.9MW, had been operational since May 2018 and benefitted from renewable obligation certificate (ROC) subsidy support.

GCP Infra originally acquired the senior secured loan notes in 2017 from the UK Green Investment Bank, subsequently converting them into an equity-like interest in the project in July 2018.

The disposal yielded net cash proceeds of £31m, which would be used to prepay drawings under the company's revolving credit facility.

GCP Infra said the move would substantially reduce its net debt position to about £45m, enhancing its financial flexibility.

Moreover, the disposal decreased GCP Infra's exposure to equity-like interests in the onshore wind sector.

In alignment with its 2023 annual report, GCP Infra's board reaffirmed its commitment to a prudent capital allocation policy.

The policy prioritised a substantial reduction in leverage, along with diminishing equity-like exposures and sector-specific exposures, while facilitating the return of capital to shareholders.

It set a conditional target of releasing £150m, or 15% of the portfolio, from disposals or refinancings, aiming to significantly reduce leverage and return at least £50m to shareholders by the end of 2024.

The disposal of the Blackcraig Wind Farm represented a significant stride towards the realisation of that target, concurrently reducing leverage and equity exposure across the portfolio.

“This disposal reinforces the company's commitment to its capital allocation policy, prioritising the reduction of leverage in the first instance, through a significant repayment of revolving credit facilities,” said chair Andrew Didham,

“It will further benefit the risk adjusted return of the portfolio, reducing equity-like exposure and exposure to electricity price movements.”

Reporting by Josh White for Sharecast.com.