US Solar Fund sells purchase option over 200MW California solar project, US$50m+ buyout on the cards

MN8 bought half the project last month and is hoping to buy the remaining stake from US Solar Fund. Image: Unsplash

US Solar Fund has sold a purchase option over its 50% interest in the 200MW Mount Signal 2 (MS2) PV project in southern California to renewables company MN8 Energy, which was formerly known as Goldman Sachs Renewable Power.

As part of the deal, MN8 will pay US Solar Fund a non-refundable fee of US$1 million and will have the option to acquire the fund’s 50% interest in MS2 for an additional US$52.2 million, excluding working capital.

The option to buy half the project will last for an initial period of six months but is extendable for a further three months by mutual agreement.

If the complete sales goes ahead, US Solar Fund will use the proceeds for new investments, working capital, and/or future capital management, it management said.

US Solar Fund announced the agreement to acquire 50% of MS2 from New Energy Solar in December 2020 and, if sold for the amount agreed with MN8, the deal would represent a gross return of 11% per annum, the company said in a statement.

In April last year, London-based US Solar Fund launched a placing programme to help expand its PV portfolio to 543MW. And after raising US$200 million in an April 2019 initial public offering (IPO), the company closed six transactions – including a deal for a 128MW solar plant in Utah and a 39MW portfolio of projects in North Carolina – comprising some 42 assets with a total capacity of 493MWdc.

Meanwhile, New Energy Solar announced the sale of its US portfolio to MN8 on 22 August, including its 50% interest in MS2, meaning MN8 could take complete control over the project if the deal with US Solar Fund goes ahead.

US Solar Fund said its board believed “this is an attractive opportunity for US Solar Fund to realise the value in the MS2 investment”.

“The option structure allows MN8 to complete the acquisition of US Solar Fund’s 50% interest after their acquisition of New Energy Solar’s 50% while providing price certainty to US Solar Fund.”

“If exercised, it will monetise a significant existing asset at its current carrying value. If not exercised, it delivers an incremental US$1 million of value in the current financial year,” said US Solar Fund CEO Liam Thomas.

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