Taiwan’s Swancor to sell offshore wind arm 

21 June 2019 - 12:00 am UTC

Taiwan’s Swancor Holding is planning to exit offshore wind business through the sale of its renewable unit to a European or an American energy company, according to a stock exchange release.

The Taipei-listed firm announced midnight yesterday (20 June) that the transaction will fetch between USD 25.98m-USD 101m and realise an estimated net gain of USD 9.14m-USD 84.63m.

​​​​The final transaction price will be subject to the development progress and cost of Formosa 2, while the contract signing is scheduled for towards the end of June, the company said. The sale comprises of transfer of 20 million Swancor Renewable shares at USD 1.3-USD 5.07 apiece.

The company’s shares plunged by 10% to TWD 93.6 at the close today (21 June).

“Though it is a surprise to us, our business is as usual, and the sale is not likely to have a big impact on the ongoing project financing of Formosa 2,” a Swancor Renewable spokesperson told Inframation.

Swancor currently owns 7.5% of Formosa 1 after selling a 7.5% stake to JERA in December, as well as a 50% stake to Macquarie and a 35% to Orsted back in 2017.

According to a source close to the situation, the renewable arm being sold, Swancor Renewable Energy, holds a stake in both Formosa 2 & 3.

The sale comes at a time when Macquarie (75%) and Swancor (25%) are in the process of raising debt and equity funding for the 376MW Formosa 2, which has a target commissioning date in 2020. The project, which has attracted indicative bids from around 30 entities including EGCO, Partners Group Marubeni, EDF and a number of pension & infrastructure funds from Canada, Australia, and Japan in an ongoing stake sale by Macquarie, is expected to reach financial close at or not long after the end of the second quarter, the source close and another source familiar with the matter said.

Reason to sell 

The failure by the Taiwanese firm’s planned Formosa 3 project to secure any capacity from Taiwan’s 1.7GW offshore wind competitive tender last year is the main reason behind the sale, the company said in the disclosure.  “[As a result of the failure], we have no wind farms to work on between 2021-2025,” Swancor Chairman Jauyang Tsai wrote in a social media post on Tuesday (18 June).

“This makes a potential offshore wind unicorn developer like Swancor Renewable suddenly lose its appeal to foreign investors and its business become unsustainable.” A “gloomy outlook” for Swancor Renewable has also led to departures of several competitive offshore wind professionals, Tsai added.

Swancor does not have enough funding to support the offshore wind projects that they are involved in, therefore this move is unsurprising, the sources said. The financial close for Formosa 2 could potentially be delayed as a result. Local banks will want to know who is replacing Swancor before proceeding, the source close said. The same source indicated that the buyer is likely to be a European investor or a developer with experience in renewable energy.

Swancor Holding, first established in 1992 as a chemical products manufacturer, is a pioneering local firm that has engaged in offshore wind development since 2011.

Its wholly-owned Swancor Renewable partnered with Macquarie Capital to develop the island’s first commercial offshore wind farm Formosa 1, with the 8MW first phase operating from 2017 and the 120MW second phase scheduled for completion at the end of the year.

 

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