Ferroglobe PLC has reached a definitive agreement for the sale of its 100% interest in subsidiary FerroAtlantica, S.A.U. to investment vehicles affiliated with TPG Sixth Street Partners. The total value of the transaction is €170 million (US$191 million).
The FerroAtlantica assets to be transferred in this transaction are 10 hydroelectric power plants with a combined generating capacity of about 167 MW, as well as the Cee-Dumbria ferroalloys factory, all located in the province of A Coruna. This transaction is a key milestone in Ferroglobe’s non-core assets divestiture plan, commenced in 2018 with the sale of hydroelectric power plants located in Aragon (Spain).
The press release did not name the affected plants. A review of Ferroglobe’s website reveals the company has 14 hydroelectric power plants in Spain and France with a combined installed capacity of 209 MW and annual average production of 650 million kWh. Only four plants are named on the website: 5-MW Carantona, 30-MW Castrelo, 3.6-MW Fervenza and 9.8-MW Nuevo Pindo.
Simultaneously with this sale, Ferroglobe has signed a long-term tolling agreement with FerroAtlantica under which it will become the exclusive off-taker of its finished goods. In return, Ferroglobe commits to supplying FerroAtlantica with key raw materials over the long term.
“The sale of FerroAtlantica represents an important step in the execution of Ferroglobe’s near term strategy of streamlining our business and strengthening our balance sheet,” said Ferroglobe Chief Executive Officer Pedro Larrea. “The structure of this transaction allows us to significantly improve the financial profile of our company, by deleveraging and enhancing liquidity, while maintaining our strong presence in the ferroalloy market and our commitment to the region of Galicia.”
The completion of the sale is subject, among other standard closing conditions, to competition clearance from the Spanish anti-trust commission (CNMC) and to the administrative authorization by the regional government of the early termination of the existing financial lease of the hydroelectric power plants. Ferroglobe expects the closing of the transaction to take place during the third quarter of 2019.
Ferroglobe supplies silicon metal, silicon-based and manganese-based specialty alloys, and other ferroalloys for the solar, automotive, consumer products, construction and energy markets.
TPG Sixth Street is a global finance and investment business with more than $30 billion in assets under management.