Rutland Partners is selling its entire interest in Carron Energy Limited, the owner of Uskmouth Power Station to a specially formed company backed by Deutsche Bank AG and funds under the management of Strategic Value Partners and Trafalgar Asset Managers for a cash consideration of £125m. The new owner has also acquired the working capital of the business.
Rutland acquired Carron Energy in July 2004 backing an experienced management team from the power generation industry to acquire Uskmouth out of administrative receivership. The transaction represented an opportunity to buy a distressed asset against a background of early signs of a recovery in UK electricity prices. The acquisition of the facility, the necessary re-commissioning projects and the working capital base for the business were initially funded by way of a £23.2m all equity investment from Rutland. In addition to the extensive work in re-commissioning the power station, Rutland and the new management created a comprehensive operational, financial and commercial infrastructure for the business. Power generation re-commenced in late 2004 and led to the introduction of bank financing and forward power sale agreements in October 2005.
Following repayment of outstanding bank debt, payment of transaction related costs and after allowing for the equity participation of Carron’s management, distributable proceeds to investors in The Rutland Fund are approximately £95m, representing a multiple of 4.1 times the original investment and an IRR of 150%.
The sale of Carron Energy is the third full disposal by The Rutland Fund, the previous two being the successful sales of Edinburgh Woollen Mill in November 2002 and Interfloor Group in August 2005.