SSE PLC TO COMPLETE SALE OF SSE ENERGY SERVICES TO OVO ENERGY
15 January 2020
SSE plc is today completing the sale of SSE Energy Services Group Limited, its household energy and services business in GB, to OVO Energy Limited for an enterprise value of £500m (the "Transaction").
The net proceeds of the Transaction will be used to reduce SSE's net debt (see Transaction Details below).
In the period since SSE and OVO agreed the sale in September 2019, the necessary regulatory approvals have been secured and joint integration planning has been undertaken to ensure a smooth transition for customers and employees.
Completion of the Transaction enables SSE to strengthen its focus on delivering the low-carbon infrastructure needed to help the UK reach net zero emissions.
Alistair Phillips-Davies, Chief Executive of SSE plc, said:
"We are very pleased to be completing this transaction, which we firmly believe is the best outcome for the business, its customers and its employees.
"The sale is in line with our clear strategy, centred on developing, operating and owning renewable energy and electricity network assets, along with growing businesses complementary to this core. SSE enters the new decade as a more focused group, even better positioned to lead the low carbon transformation required to achieve the UK's vital net zero commitment in the years to come."
Stephen Fitzpatrick, CEO and Founder of OVO, said:
"Today is an exciting day. It marks the end of one chapter for OVO but, more importantly, the beginning of the next one together with the SSE Energy Services business. We started OVO with a bold ambition to do better for customers and have stayed true to that vision ever since.
"SSE's history of excellence at scale combined with OVO's innovative technology and our Plan Zero commitments mean that together, as one team, we can bring millions more people with us on our journey towards zero carbon living."
TRANSACTION DETAILS
· The net cash proceeds of the Transaction will be used to reduce SSE's net debt.
· SSE Energy Services will be sold for an enterprise value of £500m comprising £400m in cash and £100m in loan notes.
· The £100m loan note will be issued by a member of the OVO group and will be due in 2029, unless repaid earlier, with an annual interest rate of 13.25% payable in kind.
· As stated when the Transaction was announced on 13 September 2019, the cash proceeds received will be subject to a deduction of £59m reflecting debt-like items including SSE Energy Services accruals in respect of the Capacity Market Mechanism.
· The Transaction was agreed on the basis of a 'Locked Box' mechanism, which set the date for the transfer of the economic interest in SSE Energy Services at 30 June 2019.
· SSE submitted Renewable Obligation Certificates in August 2019 in satisfaction of SSE Energy Services' Renewables Obligation for the obligation period ended 31 March 2019, the last full financial year of SSE ownership. OVO will be liable for all Renewable Obligations accrued thereafter.
· All of SSE Energy Services' c.8,000 employees will transfer to OVO Energy.
· In order to ensure a smooth transition, for a period post completion, SSE will continue to provide certain services to OVO under a Transitional Services Agreement.
· Certain defined benefits pension liabilities of SSE Energy Services, relating to c.140 employees who have chosen to transfer their benefits, will transfer fully funded from SSE pension schemes to a new SSE Energy Services pension scheme.
· There will be no immediate day-to-day impact on customers; the SSE brand will be operated by OVO under license for a period, allowing time for a phased and carefully managed migration and continued high standards of customer service.
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