Sunpower in deal to acquire 90 percent of Changshu Suyuan Thermal Power

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Sunpower Group entered a deal to acquire a 90 percent stake in steam and electricity supplier Changshu Suyuan Thermal Power from 12 shareholders for around 320 million yuan (S$63.48 million or US$46.56 million), the company said in a filing to SGX Wednesday.

Jiangsu Geqiu Environmental Technology holds a 46.3 percent interest in Changshu Suyuan Thermal Power, while the other sellers — nine individuals and two corporate shareholders — collectively hold 43.7 percent, the filing said.

Singapore-listed Sunpower said the deal was in line with its medium-to-long term strategy of building a green investments portfolio for generating long-term recurring income and cashflows.

Changshu Suyuan Thermal Power is located in the Yushan New & High-tech Industrial Development Zone in Changshu, Suzhou, Jiangsu Province in China, the filing said. The company, which is the exclusive steam supplier in its coverage area, supplies industrial steam to 49 customers, mainly in the textile printing and dyeing industries, the filing said.

Changshu Suyuan Thermal Power has seen steady revenue growth over the past three years, Sunpower said, adding it expected to upgrade the company once the acquisition is completed.

Sunpower pointed to the Changshu government’s plan to shut down and phase out small “dirty” coal-fired boilers by the end of the year.

“In light of this regulation, the demand for the steam generated by the target is expected to grow significantly after the closure of the small coal-fired boilers that the companies are utilizing in the Yushan High-tech Zone,” Sunpower said. “This will lead to an attractive valuation for
the proposed acquisition.”

Sunpower said it hired third-party valuer, Jiangsu Huaxin Asset Evaluation, to carry out due diligence, and the purchase consideration may be adjusted based on the results.

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