Background

Halite Energy Group Limited (HEGL) owned land in north-west England that had the rights to develop a fully permitted and strategically important gas storage facility in former salt caverns. When developed, the site would account for 25 per cent of the UK’s gas storage capacity.

Significant funding had been received to acquire the land and bring the project to the point where it could be developed. However, the full cost of development required further funding of an estimated £500 million. The existing funders were unwilling to commit to this and had already sought buyers for HEGL, but had not been able to agree a transaction. The company had limited cash availability and no revenue stream, so the funders provided further funding to enable an accelerated sale.

Action

HEGL and its funders appointed FRP’s Corporate Finance team to find a buyer under an accelerated sale process, while our Restructuring Advisory team undertook contingency planning in case a sale was not possible. Our Corporate Finance team approached 58 parties from around the world, consisting of major energy companies, infrastructure funds, private equity and hedge funds, and brownfield regeneration and development companies.

FRP’s ability to quickly understand the key value drivers and challenges for the project, as well as how to develop a solution for a diverse set of financial stakeholders, enabled an efficient sale process to be run involving interested parties across multiple time zones.

Outcome

The solvent sale of HEGL and associated companies to Cheshire Energy Limited, part of the NPL Group, was achieved. Cheshire Energy effectively took over the development of the site and agreed a new transaction structure with the existing secured debt funder and the equity funders.

Importantly, achieving a solvent sale meant the UK Government consents to develop the gas storage facility remained intact, thereby increasing the future value potential from the project and keeping this important asset for the UK’s energy infrastructure alive.