Enefit Green sells Brocēni cogeneration plant and pellet factory to Warmeston
According to the purchase and sale agreement signed today, Enefit Green sells Brocēni cogeneration plant and pellet factory in Latvia to Warmeston.
"Increasing the share of wind and solar energy in the Baltic States and Poland is the focus of Enefit Green. Currently, we have six wind parks under construction in Finland, Estonia, and Lithuania, as well as four solar power plants in Estonia, Latvia, and Poland with a total capacity of 715 megawatts. The sale of biomass-based cogeneration businesses allows us to focus more on our strategic business direction. The professional team at Broceni is a valuable foundation for Warmeston's growth. We thank the team for their contribution and wish them success in the future," said Innar Kaasik, Member of the Management Board and Production Manager of Enefit Green.
"For Warmeston, this is a significant step in the company's strategy to acquire additional production assets in the Baltic Sea region. Acquiring the well-maintained and well-managed Broceni cogeneration plant and pellet factory in Latvia is a step in realizing this strategy. We believe that dispatchable green energy based on renewable sources has a secure place in ensuring energy system reliability in the coming decades," stated Mait Kaup, CEO of Warmeston.
On the photo from the left: Innar Kaasik, Member of the Management Board and Production Manager of Enefit Green, Aavo Kärmas, Chairman of the Managment Board of Enefit Green, CEO of Warmeston.
The object of the transaction is the cogeneration business in Brocēni, which includes a cogeneration plant and pellet factory completed in 2016. The business unit has 39 employees, and the electricity produced is sold to the Latvian electricity grid, while the heat is used to dry raw materials in the adjacent pellet factory. The annual pellet production is about 155 thousand tonnes. Pellets are sold to energy companies, wholesale distributors and retail clients.
The value of the transaction on a cash- and debt-free basis is 32 million euros and it was financed by Swedbank Estonia. "Swedbank's participation in transactions of significance to the Estonian economy reflects the bank's role as a strategic partner for companies and demonstrates our commitment to supporting ambitious enterprises in their growth. By financing the transaction, we support the plans of a locally capitalized company to advance renewable energy production in the latest and most modern pellet factory in Latvia," commented Mihkel Utt, Head of Corporate Banking at Swedbank.
Following the transaction and asset transfer, the cogeneration plant, pellet factory, and employees will continue their existing activities within the Warmeston group.
Enefit Green was advised by LHV as a financial advisor, KPMG for financial due diligence, and TGS Baltic as a legal advisor. Warmeston was advised by Superia Corporate Finance and Cobalt. Swedbank Estonia provided financing for the transaction.
Enefit Green is one of the leading renewable energy producers in the Baltic Sea region. The company's shares are listed on the Nasdaq Tallinn Stock Exchange, and it has nearly 64,000 investors. Enefit Green focuses on developing wind and solar energy production capacities to increase the availability of green energy and enhance energy security in its home markets. The company is currently building six wind parks in Finland, Estonia, and Lithuania with a total capacity of 615 megawatts, and four solar power plants in Estonia, Latvia, and Poland with a total capacity of 100 megawatts.
Warmeston's core business is the production and sale of biomass fuels for domestic and industrial use. The company utilizes forest and wood industry residues for wood pellet production. By creating stable demand for low-value wood, biomass fuel production improves the international competitiveness of the local forestry and wood industry and replaces the use of fossil fuels in end markets. Following the acquisition, Warmeston group companies employ nearly 300 people, and the group's annual production capacity across its factories is 650,000 tons.