Prime Energy Buys Hungarian Solar Farms Amid Stock Plunge
Translated & summarized from Ice by baba
Prime Energy has signed a deal to acquire approximately 70 megawatts of solar power facilities in Hungary, including land rights. The acquisition, expected to be financed with 75% bank loans, aims to significantly boost the company's income-generating assets and profitability. This move comes as Prime Energy's stock has seen a sharp decline of over 20% in the past month. The company also has ongoing projects in Israel, including a partnership to build storage facilities at gas stations.
The story in 6 lines · by baba
- Prime Energy will acquire 70 MW of solar facilities in Hungary for an undisclosed sum.
- The Hungarian acquisition is expected to yield significant project and equity returns, especially with energy storage integration.
- Prime Energy's stock has fallen sharply, dropping over 23% in the last month.
- The deal involves approximately 17.8 million euros in equity contribution and 75% bank financing.
- The company aims to connect 666 MW and 4.7 GWh of storage by the end of 2027.
- Prime Energy is also developing storage facilities at 60 Israeli gas stations.
Prime Energy, a company specializing in solar energy systems, has signed a memorandum of understanding to acquire income-generating solar facilities connected to the grid in Hungary. The deal involves approximately 70 megawatts of capacity across four sites, including land ownership. The acquisition is expected to yield a project return of about 12.2% and an equity return of approximately 18.8% before potential enhancements from energy storage systems. Integrating energy storage is projected to significantly boost returns, potentially reaching a 38% project return and an 87% equity return.
The electricity generated by these facilities is sold under a long-term government tariff agreement, with an average remaining period of 17.2 years. The tariff is set at about 44 agorot per kilowatt-hour, indexed to Hungary's consumer price index. Prime Energy stated that the purchase will be financed with approximately 75% bank financing on a non-recourse basis for 15 years. The expected equity contribution is around 17.8 million euros, excluding transaction costs. The deal structure is debt-free and cash-free, meaning Prime Energy will assume full ownership of the project companies, including owner loans, free of external financial debt upon completion.
Prime Energy projects that by the end of 2027, it will connect 666 MW of capacity and approximately 4.7 GWh of storage, with projected revenues of 426 million shekels and project EBITDA of 252 million shekels. Yaron Kikoz, Deputy Chairman of the Board and Chief Business Officer, described the Hungarian acquisition as a significant step, noting that the company currently holds 15.85 MWp of solar facilities in the country generating annual revenues of 2.4 million euros and EBITDA of 2.1 million euros. He added that energy storage systems will also be connected to these existing facilities. The acquired portfolio is expected to substantially expand their income-generating assets, leveraging existing infrastructure for economies of scale, operational synergies, and improved profitability.
Despite this significant business development, Prime Energy's stock has experienced a notable decline. The share price dropped 12.30% in the past week, 23.30% in the last month, and 29.49% over the past three months. This follows a July announcement where Prime Energy agreed to partner with Dalia Properties to establish storage facilities and server farms at approximately 60 gas stations across Israel, with a potential capacity of about 150 megawatts.
