400 MW project Öyfjellet sold to Aquila Cap.

Expected project margin seems higher than we expected

Project divestment lowers risk and increases profit

400 MW Öyfjellet sold to Aquila Cap.
Eolus has signed an agreement with Aquila Capital for the sale of the 400 MW project Öyfjellet. The preliminary purchase price amounts to EUR 30m and covers the sale of 100% of the shares of the project company, which holds project rights, 15-year PPA, etc. The closing of this transaction is expected to take place in autumn 2019. In addition, a construction agreement of EUR 23m has been signed, which takes total revenue from the project to EUR 53m – which also is the expected profit for the project (ABGSCe EUR 44m).

Higher project margin than expected + lower risk
The construction of the wind farm will be financed by Aquila, which de-risks operations for Eolus. As the project company will no longer be owned by Eolus, total revenue and COGS will not be recognized in Eolus’ P&L or balance sheet. Only the EUR 53m (30+23) from project rights and the construction agreement will be recognized in the P&L, which has a 100% margin – therefore EUR 53m equals the expected profit.

Project divestment positive in several ways
We believe the Öyfjellet agreement with Aquila is very positive in several ways. 1) Eolus has now managed to sell the project, which accounts for nearly 50% of expected capacity to be delivered in the coming three years, which ends the risk in the project not being sold. 2) Aquila has agreed to finance the project, which lowers the risk and capital requirements from Eolus’ side. 3) The expected profit of EUR 53m is higher than our estimate of EUR 44m.

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