ENGIE crossed today as a major step in its transformation plan : the Group has received a firm offer, irrevocable and Neptune’s Energy for the sale of its 70% interest in the entity’s Exploration & Production International (” EPI “) at Neptune Energy. The proposed transaction would represent a total value of 4.7 billion euros (at 100 %, including 1.1 billion euros of provisions of decommissioning, deconsolidated the balance sheet of the ENGIE).
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ENGIE announced today that it has received a firm offer, irrevocable and Neptune’s Energy for the acquisition of its share of 70 % in PPE. Neptune Energy is a company based in the United Kingdom, supported by funds advised by The Carlyle Group and CVC Capital Partners, and by a sovereign wealth fund, whose activity is to invest in upstream activities of oil and gas. According to the tender submitted, ENGIE is now in exclusive negotiations with Neptune Energy to a disposal representing a major step in the implementation of the transformation plan of ENGIE, which aims in particular to reduce the Group’s carbon footprint and its exposure to changes in the price of the amenities.
The total value of 4.7 billion euros1 includes provisions for the decommissioning of an amount of € 1.1 billion, deconsolidated the balance sheet of ENGIE, as well as taking into account a deferred payment of an amount of approximately 90 million euros, corresponding to an adjustment of the purchase price contingent upon the achievement of milestones operational.
The proposed transaction should result in a reduction of € 2.4 billion of consolidated net financial debt of ENGIE, at the closing of the transaction (expected in the first quarter of 2018), excluding provisions.
“This proposed transaction is part of the strategy for the ENGIE which aims to become leader in energy transition in the world, in particular focusing on the production of electricity in low carbon and reducing its exposure to commodity prices. With the closing of this transaction, the activities contracted and regulated will account for more than 85 % of the EBITDA of ENGIE, allowing the Group to reach the goal set for the end of 2018 and improve its risk profile. This major step is also the sign of the attractiveness of the entity’s PPE, and a recognition undeniable across the industry from the expertise of the teams. We are convinced that Neptune Energy is the best potential buyer to ensure the development of EPI and its employees, ” said Isabelle Kocher, Executive Director of ENGIE.
“A year after the launch of the transformation plan of ENGIE, this project is further evidence of the significant progress achieved in the implementation of our divestiture program of 15 billion euros : we are ahead of our plan, with 70 % of the disposals already signed or finalized, and this under favourable conditions. Reducing exposure to ENGIE to changes in the price of commodities, the proposed transaction would strengthen the Group’s balance sheet, ” added Judith Hartmann, Deputy Director General of ENGIE in charge of Finance.
Neptune Energy would become the sole shareholder of PPE. Neptune Energy is led by Sam Laidlaw, former managing Director of Centrica plc. The ambition of the Neptune Energy is to continue the development of activities of exploration and production of PPE, through organic growth and the search for investment opportunities of high quality in the North sea, North Africa and South-East Asia.
In the context of the proposed transaction, ENGIE would retain a 30% interest in the project gas of the Touat in Algeria, currently in the development phase. ENGIE is still a major player in gas in Algeria via its LNG activities, and its experience in the country is seen as the key to produce the first gas from the project Tuat. In the context of the proposed transaction, ENGIE will be also the provider of loans to buyers.
The seat of PPE is located in France and the company has assets in the exploration of oil and gas in the United Kingdom, Norway, Germany, the netherlands, Indonesia, Algeria and Egypt. December 31, 2016, EPI had 2P reserves of 672 million barrels of oil equivalent and its production reached 148 000 barrels of oil equivalent per day in 2016. In march 2017, PPE was 1 622 employees. Actor socially responsible, ENGIE will continue the dialogue with the representative bodies of the staff and employees during the transition phase in the context of the proposed transaction. An agreement has already been concluded with Neptune Energy, which provides that no social plan would only be launched in the next two years on the perimeter reorganized in the framework of the transformation plan of the PPE, and that employees of PPE would have access to employment opportunities internal ENGIE the two years following the closing of the proposed transaction.
This transaction is subject to the respect of the prerogatives of the representative bodies of the staff of ENGIE and PPE, and to customary closing conditions. It should be completed in the first quarter of 2018.
1 Estimate December 31, 2016.
About ENGIE
ENGIE registered responsible growth at the heart of its businesses (electricity, natural gas, energy services) to meet the major challenges of the energy transition towards a low-carbon economy : access to sustainable energy, mitigation and adaptation to climate change and the prudent use of resources. The Group is developing of efficient and innovative solutions to individuals, cities and businesses by relying on its expertise in four key sectors : renewable energy, energy efficiency, liquefied natural gas and digital technology. ENGIE has 153 090 employees worldwide and a turnover in 2016 of $ 66.6 billion euros. Listed in Paris and Brussels (ENGI), the Group is represented in the main international indices : CAC 40, CAC 40 Governance, BEL 20, DJ Euro Stoxx 50, Euronext 100, FTSE Eurotop 100, MSCI Europe, DJSI World, DJSI Europe and Euronext Vigeo (World 120, Eurozone 120, Europe 120 and France 20).
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