12.04.2011 | Solar Millennium considers financing options to accelerate growth

Looks to strengthen equity through capital rise, private placement or convertible bonds

Bosch, Siemens, Iberdrola, Acciona and Abingoa indicated as potential investors

Seeks USD 700m to finance project in California Solar Millennium (ISIN DE0007218406), a listed German solar thermal power plant developer, is considering financing options to accelerate its growth, CEO Christoph Wolff said. Institutional investors as well as strategic partners providing an entry into new markets, are attractive options, he said, adding that the aim is to close the financing by the end of next year.

Solar Millennium (SMAG) is evaluating the options such as a capital increase, a private placement directed to strategic investors and the issue of convertible bonds to strengthen its equity capital, the CEO said, pointing out that the company wants to maintain its independence. The raised funds will allow it to grow faster financing more and bigger projects, he said, noting that SMAG is a fast-growing company that often needs to pre-finance its growth. Half of SMAG is in the hands of private investors, 40% is held by institutional investors and 10% by the management. Bosch, Siemens and major energy players both in Europe and in China are the most likely investors in SMAG, said Thomas Laible, company partner who holds responsibilities for solar sector at Transfer Partners. He opined SMAG has good technology and can attract suitors. He suggested that the company is looking directly for investors and believed that no adviser has been involved. SMAG could appeal to financial investors also, an industry source said, naming industrial groups such as Bosch and Siemens and large renewable energy groups like Spanish Iberdrola, Abengoa and Acciona. Citigroup and Deutsche Bank have been appointed to assist with the financing of a US project regarding the construction of two 250MW power plants near Los Angeles, California, Wolff said. SMAG seeks USD 700m financing representing a 25% of the total plants' investment of USD 2.8bn. The remaining 75% are to be financed with credit lines backed up by loan guarantees of the US Department of Energy, he explained. Investors will acquire a stake in the SPV (Special Purpose Vehicle) created to manage the project and not in SMAG itself, he clarified.

The company aims to close the financing by the end of summer South and North Africa, the Middle East, China and India are the target areas where SMAG is planning to expand with the support of partners, Wolff said. He mentioned that SMAG is also part of the industrial initiative (including companies and the DESERTEC Foundation) to bring forward the DESERTEC concept in Europe and MENA, he added. SMAG’s main markets are Spain and the US. In 2009-10 (financial year ended 31 October) SMAG reached revenue of EUR186.4m (-15%) and an EBITDA of EUR 1.5m. The company has a market cap of EUR 236m. Ferrostaal and Orascom are among SMAG's partners.

The company works closely with research institutes such as German Aerospace Center, the Plataforma Solar de Almería and the Fraunhofer Institute for Material Flow and Logistics. The company was founded in 1998 with the name of Solar Century Management and took the name of Solar Millennium in 1999.

by Laura Larghi in Munich