SSE has completed the sale, to Equitix Infrastructure 3 Limited, a fund managed by Equitix, of its 100% equity interest in the special purpose entities (SPEs) established in England under the Private Finance Initiative (PFI), for the delivery of seven street lighting projects.
The SPEs are funded through a mix of senior debt and equity, and the removal of this project-related senior debt, along with the cash consideration of £97.5 million, will have the immediate effect of reducing SSE's net debt by £326.4 million.
The project SPEs have a 25 year agreement with their respective local authorities, under which they have the responsibility for the replacement, operation and maintenance of the street lighting assets of that local authority. Those operational responsibilities are being, and will continue to be, carried out by SSE Contracting Limited under a parallel 25-year sub-contract with the Equitix-owned SPEs.
SSE's remaining street lighting asset portfolio, which comprises equity interests in four further PFI projects, will be made available for purchase in the next few months.
Gregor Alexander, Finance Director of SSE, said:
"I believe this is a good deal for Equitix, SSE and the local authorities concerned. For SSE, I am pleased that this important milestone in our value programme has been reached and that SSE Contracting Limited will have the opportunity to play to its strengths by providing the operational services that Equitix and the local authorities need for remainder of the life of the PFI contracts."