PRESS

2011-05-24

Disposal of Equity Interest in Guazhou Wind Power Project to Jilin Power


CWP announced that it has entered into a Disposal Agreement to divest its 46% and 5% equity interest in Gansu Guazhou Century Concord Wind Power Co. Limited ("Guazhou Company") to Jilin Power Share Co., Ltd. ("Jilin Power") and Jilin CPI Xiehe New Energy Co., Ltd. (“Jilin Xiehe”) respectively at a consideration of RMB446.3 million (equivalent to HK$533.3 million) and RMB48.51 million (equivalent to HK$58 million) respectively. The aggregate consideration of the Disposal Agreement is RMB494.8 million (equivalent to HK$591.3 million).
Guazhou Company is mainly engaged in the investment and development of wind power projects, including the Guazhou wind farm and the transformer station, in Guazhou County, Jiuquan City, Gansu Province, China. The disposal of the Guazhou Company project is the Group’s first wind farm project sold after being put into operation.
Jilin Power, one of the purchasers, is listed on the Shenzhen Stock Exchange. It is principally engaged in the development, investment, construction, production and sale of thermal power, hydropower, heat, industrial gas and other new energy resources.
Jilin Xiehe, the other purchaser, is an associate of China WindPower which holds 49% equity interest in the former. After the completion of the two transactions, the Group would effectively hold a 51.45% interest in Guazhou Company which would be accounted for as a jointly controlled entity.
CWP has started to execute optimized operating strategy last year in which we would gradually develop and build more sole-owned wind power plants each year, and sell down a partial equity stake of the sole-owned wind power projects after the plants are put into operation. Compared to the joint-venture business model in the early stage of the project, the new operating strategies will gain higher returns and will bring the Group’s rich wind power resources and strong developing and constructing wind power plants capability in full play. We aim to dispose 100 to 150MW of equity interest in wind power plants to power plant operators or financial investors at a target equity premium of 25% to 60% each year. This strategy enables us to enhance cash flow and profit and accelerate the investment and development of wind power projects with collaboration through sharing expertise, experience and resources. The disposal presented a good opportunity for the Group to realise part of its investment in the Guazhou Wind Farm Project and the Transformer Station at a reasonable price. The partnership with Jilin Power to jointly run the project would also generate synergies. The Group will continue to enjoy a share of the the return from the project through its significant ownership stake.

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