Theolia takes control at Breeze Two

France’s Theolia has taken control of Germany’s Breeze Two Energy, more than doubling its in-house wind capacity as the recovering company hunts for steady, long-term sources of revenue.

Breeze Two Energy issued a series of bonds in 2006 to build a series of wind projects, now totalling 311MW in Germany and 26MW in France.

Working through a subsidiary, Theolia has bought 70% of one tranche of Breeze Two’s outstanding bonds, giving it “control” of the German company and the right to install its own chief executive, Fady Khallouf, as new managing director.

The deal puts an enterprise value of €309m ($415.8m) on Breeze Two.

Theolia, whose own debt mountain nearly tipped it into bankruptcy several years ago, will finance the manoeuvre principally through a new €34m non-recourse loan due in 2026.

The deal represents a rebounding sense of self-assurance at Theolia, which has not yet managed to bounce back to profitability -- despite adopting a new, less risky strategy several years ago centred on long-term ownership of wind farms.

Theolia shares were up more than 9% at €1.69 in early trading on 28 January.

Theolia’s 2012 first-half net loss deepened by nearly 50% to €10.3m, as it struggled with a low conversion rate among holders of its outstanding convertible bonds, boosting its interest expenses. 

However, earnings before interest, taxes, depreciation and amortization more than doubled to €15.9m, while revenues rose 31% to €35.8m due to strong growth from the sale of wind-generated electricity.

The Breeze Two deal shows that Theolia is back on a flight path, and demonstrates its ability to “integrate other operators”, says chief executive Khallouf.

The deal brings the installed capacity Theolia operates on its own account to 634MW, from 297MW.

Theolia, which sold a big portion of its wind assets during the throes of its financial troubles, also manages a significant amount of capacity for other parties, usually through jointly owned wind farms.

Among the next major projects in Theolia's pipeline is the 100MW repowering of the existing Koudia Al Baida wind farm near Tangiers, Morocco.

The repowering will be followed by the development of a 200MW project on an adjacent site.