Pa­cific buys Con­tract Power

The Australian Energy Review - - NEWS - CAMERON DRUM­MOND

POWER gen­er­a­tor Pa­cific En­ergy has struck an agree­ment to ac­quire Con­tract Power for $90 mil­lion. Con­tract is a re­mote power gen­er­a­tion spe­cial­ist with cus­tomers in the hard rock lithium sec­tor in­clud­ing Pil­bara Min­er­als, Galaxy Re­sources and Tawana Re­sources; and Pa­cific, through its sub­sidiary Kal­go­or­lie Power Sys­tems, is WA’S largest power sup­plier to the gold sec­tor. The deal will give Pa­cific an ad­di­tional 82 megawatts (MW) of in­stalled power gen­er­a­tion, tak­ing its to­tal ca­pac­ity to 245MW across 16 projects. “The trans­ac­tion with Con­tract Power gives Pa­cific En­ergy sig­nif­i­cantly more scale and reach, now with over 30 long-term power gen­er­a­tion con­tracts for re­mote mines and town­ships and a weighted av­er­age re­main­ing con­tract du­ra­tion ris­ing above four years across the en­tire port­fo­lio,” Pa­cific man­ag­ing di­rec­tor James Cullen said. “This pro­vides us with stronger and longer earn­ings visibility,” he said. Con­tract Power founder Leon Hodges said that dur­ing the due dili­gence of the deal it be­came very clear that the two busi­nesses were re­mark­ably sim­i­lar. “I am look­ing for­ward to con­tin­u­ing to drive the busi­ness with our team and the sup­port of Pa­cific En­ergy’s re­sources … this is cer­tainly a land­mark trans­ac­tion in our in­dus­try,” Mr Hodges said. Mr Cullen said that sub­ject to the set­tle­ment of the trans­ac­tion, the es­ti­mated EBITDA for Con­tract in FY19 would be in the range of be­tween $14m and $16m, and likely in­crease to be­tween $17m and $19m the fol­low­ing fi­nan­cial year. “In ad­di­tion to a de­pend­able and grow­ing earn­ings pro­file, the trans­ac­tion is also backed by strong un­der­ly­ing as­set val­ues, both in­stalled on site and avail­able to be in­stalled in [the] fu­ture, and gives both com­pa­nies ac­cess to an ex­panded as­set base and there­fore lower joint fu­ture cap­i­tal ex­pen­di­ture and im­proved util­i­sa­tion,” Mr Cullen said.

The ac­qui­si­tion will take Pa­cific En­ergy’s to­tal pro­vided ca­pac­ity up to 245MW.

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