SeaEnergy to re-focus on marine services for offshore windfarm industry

In its final results statement, SeaEnergy (LON:SEA) announced plans to re-focus its business to concentrate on marine services for the offshore wind power industry, after an assessment of the equity markets, investor sentiment and the funding environment. The company plans to sell all, or a significant part, of its 80%-owned stake in its subsidiary SeaEnergy Renewables Limited (SERL), which owns a stake in a 1,300MW offshore wind power development in the North Sea.

"Offshore wind continues to present an exciting and attractive proposition for shareholders. However, our recent discussions with the capital markets have highlighted the tough financing environment. Therefore, in order to maximise value for our shareholders, we have come to the decision to dispose of our majority interest in our subsidiary business, SERL," SeaEnergy chairman Steve Remp commented.

"The sale of SERL would allow us to focus on the development of our Marine Services business which has the ability to generate earnings and cash-flow quickly”.

SeaEnergy told investors that it has conducted a review of opportunities for the marine service business, and a detailed feasibility assessment into the best prospects is close to completion. According to SeaEnergy, this new business direction builds on the company’s experience in the oil & gas industry and "specific lessons learned" while constructing the Beatrice Demonstrator turbines.

In relation to SERL, the company said the business has made enormous strides, over the past two years, to establish a significant offshore wind farm development business. Notably, the subsidiary’s development stepped-up a notch earlier this year when, in partnership with EDF, it was awarded a 1,300MW offshore wind farm site at Moray Firth by The Crown Estate as part of the UK’s licensing ‘Round 3’.

The subsidiary is also discussing the terms of a Memorandum of Understanding (MoU) with The Crown Estate, in relation to the 905MW Inch Cape wind-farm project, following the withdrawal of RWE npower from the project’s development consortium. Through the discussions SERL may increase its interest in the project.

Also, in October 2009, SERL made its first steps internationally with an agreement with Taiwan Generations Corporation (TGC) to jointly plan, construct and operate wind-farms in Taiwan.

In terms of SERL’s funding, SeaEnergy acknowledged that access to further funding would be essential to realise the full potential of what the company has achieved to date. “However, our recent discussions with the capital markets have highlighted the tough financing environment”, Remp said. According to SeaEnergy, it does not believe, given the current equity market conditions, that institutional investors are willing to support the three to four year development timetable required to bring the projects to consent and onwards to financial close.

Consequently, the company said it will be look to crystallise all, or a significant part, of the value created in SERL for SeaEnergy shareholders and it has initiated the formal sale process.

“SERL's success in Round 3, along with our partner EDP Renováveis, illustrates the business' ability to develop major projects. We believe this makes SERL an attractive proposition for prospective buyers and we have already seen interest from a number of third parties over the past year”, Remp added.

In terms of the financial results, for the twelve months ended 31st December 2009, SeaEnergy reported a loss of £6.5 million (FY08: £3.4m loss) and, at the end of the year, had cash position of £2.8m (FY08: £1.1m).

http://www.proactiveinvestors.co.uk/companies/news/17824/seaenergy-to-re-focus-on-marine-services-for-offshore-windfarm-industry-17824.html