Pacific Energy has secured an agreement to buy Contract Power Group, which has a worth of $90 million.
The power station and energy infrastructure company set out to purchase Contract Power, a remote power generation provider specialised in the build, own, operate (BOO) market across Australia, Asia and Africa. The company has completed projects for clients including Tawana Resources and its joint venture partner Alliance Mineral Assets, Pilbara Minerals and Galaxy Resources, among others.
The acquisition will allow Pacific Energy the opportunity to expand its presence in the growing BOO market. Contract Power is the leading BOO power company in the gold sector, with 245 megawatts (MW) of capacity across its 16 sites.
Pacific Energy will acquire the company through a $90 million transaction to be funded by $85 million in cash— to be funded from a NAZ-NAB debt facility of $140 million — and $5 million in Pacific Energy shares.
James Cullen, managing director of Pacific Energy, said that the transaction would give the company significant scale and reach, with over 30 long-term power generation contracts for remote mines and townships across the portfolio.
“In addition to a dependable and growing earnings profile, the transaction is also backed by strong underlying asset values, both installed onsite and available to be installed in future,” he said, “and gives both companies access to an expanded asset base and therefore lower joint future capital expenditure and improved utilisation.”
Contract Power’s current projects include the building of a BOO power station in Pilgangoora, Western Australia for Pilbara Minerals lithium-tantalum project. It is expected to be competed by the end of the quarter.