Australia’s only publicly listed pure solar player, New Energy Solar, plans to sell more of its solar portfolio – this time in the US – as company management scrambles to increase the company’s share price.
New Energy Solar released an update for shareholders on Friday, in which it cut dividend payments after production from its U.S.-based solar portfolio fell short of expectations.
Last year, New Energy Solar divested itself of its only two Australian assets – the Manildra and Beryl solar parks – in a bid to improve the company’s value for shareholders, paying down debt and buying a part of the outstanding shares.
This left the company with a portfolio of 14 solar power projects, all located in the United States, where the company said it sees a more profitable economic environment for solar projects.
However, the performance of the US portfolio was affected by a series of unexpected events, including the Covid-19 pandemic, bushfire damage to two of its California projects and reduced production at a third. project.
The company’s management has openly expressed frustration that its shares have priced the company at a significant discount to the valuation of its assets, prompting the company to consider selling all or part of its remaining US solar portfolio.
“NEW, with its portfolio now entirely located in the United States, is part of an industry that is experiencing extraordinary disruption and change.
Unfortunately, NEW has not been able, to date, to translate its participation in the US market into value in its listed securities for the benefit of its shareholders,” the company said in a statement to shareholders on Friday.
New Energy Solar shares are currently trading at around 91 cents per share – quite a low price compared to the valuation of $1.15 per share produced by the company’s management – prompting the company’s management to reassess further. how to increase the share price.
In 2020, RBC Capital Markets was tasked with undertaking a strategic review of the New Energy Solar business, recommending the sale of Australian assets and a simplification of the company’s corporate structure.
On Friday, the company said it would reconsider the review’s recommendations and take further steps to improve its performance.
“Although it has been a busy year, the share price has unfortunately not shown any sustained improvement, so the Board of Directors has decided to revisit the recommendations of its strategic review to restore value to NEW shareholders,” said New Energy Solar CEO Liam Thomas.
“These recommendations include sales of individual assets and portfolios. Exploring such transactions should take at least six months.
New Energy Solar has been listed on the ASX to provide Australian investors with access to conventional solar ‘co-return’ – where the company’s main objective is to distribute profits to shareholders through regular dividends – by amassing a portfolio of solar projects that have already entered into long-term power purchase agreements.
Although the company promotes the business model as being capable of generating regular and predictable revenues, this has not prevented the performance of certain projects from being impacted by unexpected events.
Michael Mazengarb is a journalist at RenewEconomy, based in Sydney. Prior to joining RenewEconomy, Michael worked in the renewable energy industry for over a decade.