The chief executive has done a deal to make everyone happy, and put the wind energy firm in position to realise its potential, writes Barry O'Halloran
The normally vocal Airtricity chief executive, Eddie O'Connor, stuck to the script yesterday. But he must feel vindicated by the sale of his company's American business to German utility Eon for €1 billion.
O'Connor has been banging the wind energy drum loudly in this country, Europe and the Americas since he founded Airtricity eight years ago.
Yesterday, Eon, one of Europe's biggest electricity companies, announced that it planned to pay $1.4 billion (€1 billion) for the Irish wind energy group's businesses in the US and Canada. It is one of the biggest deals announced to date in the renewable sector.
It's good news for O'Connor. Industry commentators believe the sale values Airtricity's remaining European operation at the same level. He holds 4 per cent of the group's 50 million issued shares, meaning he is worth €20 million on paper.
It's even better news for Irish utility NTR, which holds 50 per cent of Airtricity. It means that asset is valued at €500 million or so. And these figures may not stop there.
Mortimer Menzel, of merchant bank Augusta and Co, remarked yesterday that the deal "proves investors are willing to give significant value to development assets beyond the value of operational wind farms".
In short, what he is saying is that Eon is buying potential. What it is getting for its money is 210 megawatts (mw) of installed generating capacity. By Airtricity's own estimates, that's enough electricity to power about 117,000 homes, but it's less than the 214 mw of capacity it has operating in the Republic.
Eon will get another 880 mw of capacity that is set to begin operating next year, along with 6,000 mw of capacity in varying stages of development.
It is going to have to spend a further €2.5 billion to get all of it up and running.
The sale will go some way to helping Airtricity realise its own potential. It will get about €800 million in cash when the sale goes through at the end of the year, money it is going to need. The group is developing wind power farms everywhere, from Ireland to the Baltic and from Scotland to Iberia. One of these proposals includes building the world's biggest wind farm, in the North Sea, which will cost it €10 billion.
That's based on the current price of the wind turbines used to generate electricity, which will set you back roughly €1 million per megawatt of capacity.
But because of the enthusiasm for building wind farms, that price is going up. As a result, the investment needed to develop them is high.
Airtricity and its bank, Credit Suisse, have been casting around for some time to find the best way of raising cash for the group. The Eon deal turned out to be the best option.
Eon itself is not doing anything rash. The German group is leading the charge against an EU attempt to get big power companies to split their electricity generating businesses from their distribution operations.
But virtually all western governments offer some form of support to the renewable energy industry. Buying into it, as Eon has been, could look a shrewd move if Brussels continues to tighten the regulatory screws on conventional energy companies and starts demanding that they offload assets.
It looks like O'Connor has done a deal that makes everybody happy. He may have stuck to the script yesterday, but he was probably itching to say "I told you so".
