Theolia SA, the French wind-power developer that agreed to buy Breeze Two Energy GmbH & Co. this week, said it will increase sales at the German company in a bid to reassure bondholders after debt payments were deferred.
“I want Breeze Two to be able to meet its requirements and its commitments,” Fady Khallouf, chief executive officer of Aix-en-Provence-based Theolia, said by phone. Theolia will seek to increase cash flows from Breeze’s wind farms in France and Germany while cutting its costs, he said.
The CEO’s remarks are aimed at buoying investor confidence in Breeze after lower-than-expected wind output prompted it to defer interest payments on part of a 470 million-euro ($642 million) bond offering. Theolia, which averted its own bankruptcy in 2010 amid a funding shortage, is seeking to boost electricity sales from wind parks to curb debt and boost cash.
“We have a good profitability keeping these assets over the long term, because we are taking advantage of recurrent revenues with good margins,” Khallouf said yesterday from Paris. The Breeze deal doubles Theolia’s installed capacity to 634 megawatts and will increase sales to 100 million euros a year from 67.5 million euros in 2011, according to the company.
Breeze Two, owned by Luxembourg-registered Monument Trust Ltd., financed its wind parks using proceeds from 470 million euros of bonds issued by CRC Breeze Finance SA in 2006: 300 million euros of Class A notes, 50 million euros Class B and 120 million euros Class C.
As part of the transaction to take control of Breeze, Theolia paid 35.5 million euros for 70 percent of the Class C notes. The deal “reflected” Breeze Two’s 309 million-euro enterprise value, Theolia said. Khallouf declined to give more details on the transaction.
Principal payments on the Class B notes have been deferred since the April 2009 payment date, according to Standard & Poor’s Financial Services LLC. The New York-based ratings company revised its outlook on the A and B notes to stable from negative on Dec. 5 saying wind-park performance improved and the risk of insolvency decreased. Breeze couldn’t be reached today.
Theolia also has wind projects in Italy and Morocco. It expects to select a company to replace operating turbines with higher-capacity machines at the first 100-megawatt phase of the Koudia Al Baida venture in northern Morocco in April or May, Khallouf said.