British Salt gas caverns deal completes with £200m EDF investment
BRITISH Salt last night completed the sale of ten huge underground caverns in Cheshire to energy company EDF in a multi-million pound deal, with EDF expected to invest a total of £200m in development of the Cheshire site.
As TheBusinessDesk reported yesterday, EDF has bought the caverns from Cheshire-based British Salt, which is majority owned by private equity house Lloyds TSB Development Capital, to use as gas storage facilities.
Although the size of the deal has not been disclosed, it is understood to run into tens of millions of pounds, with EDF’s total investment in preparing the caverns for gas use, and building a new processing plant, understood to be around the £200m mark.
Rob Jones, chief executive of British Salt, said the company had started developing cavities specifically for gas storage in the mid 1990s, working in partnership with EDF Trading.
“This scheme is a continuation of that initial project and it is fantastic news that a company like EDF Energy has chosen to invest again in the area, he said.
Carl Wormald, director of LDC, said: “Given the continued imperative to increase natural gas storage capacity in the UK, the scheme represents a valuable and strategically important asset. The sale has been concluded in line with our original investment strategy and represents an excellent outcome for LDC, British Salt and EDF Energy”.
He added: “With continued demand from several fast-growing UK and overseas markets and more than 100 years of salt reserves to exploit, the British Salt business remains well positioned to target growth opportunities for its products and we look forward to continuing our work with the management team.”
Paul Lupton, regional head of corporate finance at Deloitte, who advised British Salt and LDC, said it was a complex deal that required significant technical input from a multi-disciplinary team across the firm.
He added: “Securing such an excellent outcome in the current climate is testament to the quality of the scheme, the support of LDC, the commitment of EDF Energy and the strength of the advisory team.”
British Salt and LDC were also advised by DLA Piper in Manchester, led by Neal Shepherd.
British Salt, which has a £35m turnover and employs 125 staff, was backed by LDC in a £100m management buyout back 2007.