8-KFinancial EventsRegulation FDOther Events+1

EVERSOURCE ENERGY 8-K Report, Material Impairment (May 25, 2023)

Filed May 25, 2023For Securities:ES

Summary

Eversource Energy (ES) announced on May 25, 2023, the completion of its strategic review of its offshore wind business. The company has entered into an agreement to sell its 50% interest in an uncommitted offshore lease area for $625 million in an all-cash transaction, expected to close by the end of Q3 2023. Additionally, Eversource will provide tax equity for the South Fork Wind project, recovering this investment via investment tax credits around its commercial operation date in late 2023. As a result of this strategic review and current market conditions impacting the valuation of its offshore wind assets, Eversource has determined an "other-than-temporary impairment" is necessary. The company expects to recognize an after-tax impairment charge in the range of $220 million to $280 million in the second quarter of 2023. This impairment will not affect cash flows or cash balances, though the company will continue to make required cash contributions to its joint venture until the sale of its contracted projects is finalized. Eversource also confirmed its ongoing pursuit of selling its 50% interest in three jointly-owned contracted offshore wind projects, with an announcement anticipated by the end of June.

Key Highlights

  • 1Eversource Energy is selling its 50% stake in an uncommitted offshore lease area for $625 million cash, with closing expected by Q3 2023.
  • 2The company will make a tax equity investment in the South Fork Wind project, recouping it through investment tax credits.
  • 3Eversource is booking an "other-than-temporary impairment" charge estimated between $220 million and $280 million (after-tax) for its offshore wind investments.
  • 4The impairment charge reflects lower-than-expected sale values due to unfavorable market conditions.
  • 5The impairment will not impact current cash flows or cash balances.
  • 6Eversource continues to seek a buyer for its 50% interest in three contracted offshore wind projects, with an announcement expected by the end of June.

Frequently Asked Questions

The impairment charge is due to an "other-than-temporary impairment" on Eversource's offshore wind investments. This was determined after a strategic review, and it reflects that the carrying value of the investment exceeds its fair value. This is largely driven by recent unfavorable changes in market conditions, resulting in lower than expected indicative bid values for the sale of its offshore wind projects.

No, the impairment charge is a non-cash accounting adjustment and will not impact Eversource's cash flows or cash balances. The company will continue to make necessary cash expenditures for its joint venture until the sale of its contracted offshore wind projects is completed.

Eversource is selling its 50% interest in an uncommitted offshore lease area for $625 million. It is also entering into a tax equity investment for the South Fork Wind project and continuing to pursue the sale of its 50% interest in three jointly-owned contracted offshore wind projects.

Eversource anticipates making an announcement regarding the sale of its 50% interest in the three jointly-owned contracted offshore wind projects by the end of June 2023.