CLAYTON UTZ acted for Macquarie Bank and Perpetual on its acquisition of Brown Hill Pty Ltd, the owner of an AGL Energy managed wind farm being constructed near Hallett, about 200 kilometres north of Adelaide.
The 45-turbine, 94.5 megawatt AGL Hallett Wind Farm is currently being constructed by Suzlon and is due for completion by May 2008.
Two Perpetual diversified infrastructure funds are now funding the wind farm’s development and construction costs and will own the physical asset. AGL Energy will continue to own the output from the wind farm, retain all renewable energy credits until 2033 as well as operate and maintain the wind farm.
Gilbert + Tobin acted for AGL and Freehills for the lender to Perpetual, National Australia Bank.
The wind farm will provide 24 per cent of AGL’s future Renewable Energy Certificate (REC) requirements. Under the Renewable Energy (Electricity) Act 2000, liable companies such as AGL are required to surrender RECs to the Office of the Renewable Energy Regulator or pay a shortfall charge.
Renewable energy certificates can only be created by accredited renewable energy generators and are equivalent to one megawatt hour of renewable electricity.
“This is an innovative way of funding our future capital expenditure requirements for plants of this nature, where AGL can effectively arbitrage the differing cost of capital between infrastructure investors and AGL,” said AGL managing director Paul Anthony in a statement.
Clayton Utz lead partner on the deal, Simon Truskett, said a challenging deadline was set for the deal’s completion on 18 December before the Christmas shutdown.
“From the time that the final offer was made by our client to the time that the transaction closed was about two weeks, so it was a pretty intensive period where all of the transaction documents were negotiated,” he said.
“There were transaction documents regulating AGL’s responsibilities to make sure that the facility was built on time and in accordance with the specifications. And then the long-term power purchase agreements and associated project documents had to be negotiated over that period.”
He said it was a little unusual to be working on an acquisition whose assets hadn’t yet been constructed. “So we were effectively buying a development opportunity, [with] AGL Energy managing the construction on behalf of Perpetual”.
The Hallett Wind Farm development is part of AGL’s strategy to source 84 per cent of electricity generation from renewable and cleaner burning gas sources.
Partner Faith Taylor in Clayton Utz’s M&A and energy practice and Quentin Solomon in the banking practice also worked on the transaction.