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Tilt commits to Dundonnell development, lifts earnings

By Gavin Evans

Oct. 31 (BusinessDesk) - Tilt Renewables is pressing ahead with its A$560 million Dundonnell project after securing another offtake agreement for the wind farm in Victoria.

The unnamed “investment grade” counterparty will take 50 percent of the project’s output for the next 15 years. That takes committed production to 87 percent, after allowing for the state government’s commitment.

“These contracts substantially de-risk this project and demonstrate our ability to execute our strategy,” Tilt chief executive Deion Campbell said in a statement.

Melbourne-based Tilt, subject to a takeover offer from major shareholders Infratil and Mercury NZ, is ramping up its development programme in Australia to take advantage of demand for renewable generation there. It completed the 54 MW Salt Creek project in July and earlier this month said it was working with Genesis Energy to advance a 100 MW development at its Waverley site on the southern Taranaki coast.

It expects to make a final investment decision on that project in the first half of next year.

The 336 MW Dundonnell project is Tilt’s biggest development yet, comprising 80 Vestas 4.2 MW turbines. They will stand 189 metres high to the blade tip, with a 150-metre diameter rotor and should generate about 1,230 gigawatt-hours of electricity annually.

Tilt noted the project will increase the firm’s annual generation by about 58 percent to 3,350 GWh, while extending the average remaining life across its seven wind farms in Australia and New Zealand by about five years to 22.8 years.

Dundonnell’s expected 42 percent capacity factor will also the fleet-wide factor to 39.3 percent from just over 38 percent now.

Tilt’s board approved the project yesterday. Construction is expected to start early next year, with full commercial operations due by September 2020.

Tilt’s plan to raise A$280 million for the project through a rights offer has figured strongly in Infratil’s bid to take over the company. It has highlighted the risk of dilution for those minority shareholders not planning to participate in the capital raising.

Today Tilt said the capital raising will probably be early next year. It didn’t provide any additional terms.

In September Infratil and Mercury offered $2.30 for the 22 percent of the company they didn't already control. The offer was extended a second time this week and now closes Nov. 13. As of yesterday, the pair’s interest had reached 83.6 percent.

Tilt earlier this month said generation for the six months through September totalled 1,070 GWh, 23 percent more than the year before and 6 percent ahead of long-term expectations

Accordingly, it raised its March-year operating earnings forecast to A$134 million to A$138 million, from the A$120 million to A$127 million of earnings before interest, tax, depreciation, amortisation and changes in financial instruments it forecast in May.

Today the company reported first-half ebitdaf of A$66.9 million, 36 percent more than a year earlier. An almost A$27 million benefit from increased generation volumes and a slight lift in pricing, and capitalised Dundonnell costs, was slightly offset by increased development and generation expenditure.

Net profit fell 6 percent to A$8.5 million on higher depreciation and lower gains on financial instruments than the year before.

Tilt will pay a 1.6 Australian cent dividend on Nov.30 to shareholders registered at Nov. 16.



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