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EVERSOURCE ENERGY 8-K Report, Material Agreement (Feb 14, 2024)

Filed February 14, 2024For Securities:ES

Summary

Eversource Energy (ES) announced on February 14, 2024, via an 8-K filing, a significant divestiture of its interests in the South Fork Wind and Revolution Wind projects. The company has entered into a Membership Interest Purchase Agreement to sell its equity stakes in North East Offshore, LLC and South Fork Class B Member, LLC to GIP IV Whale Fund Holdings, L.P. for approximately $1.1 billion, subject to customary adjustments. This transaction marks a strategic shift for Eversource, reducing its exposure to these large-scale offshore wind developments. While the company will retain its tax equity membership interest in South Fork Wind Holdings, LLC, the sale addresses potential capital expenditure overruns and future revenue/cost adjustments tied to project performance and financing. Investors should monitor the closing conditions, which include regulatory approvals and credit rating requirements, as well as the detailed post-closing adjustments that could impact the final net proceeds.

Key Highlights

  • 1Eversource Energy is selling its interests in the South Fork Wind and Revolution Wind projects for approximately $1.1 billion.
  • 2The buyer is GIP IV Whale Fund Holdings, L.P., an affiliate of Global Infrastructure Management.
  • 3Eversource will retain its tax equity membership interest in South Fork Wind Holdings, LLC.
  • 4The agreement includes provisions for sharing capital expenditure overruns during the construction phase of the Revolution Wind project.
  • 5Post-closing purchase price adjustments are tied to achieving a specific Internal Rate of Return (IRR) for the buyer.
  • 6The transaction is expected to close in mid-2024, subject to numerous closing conditions including regulatory approvals.
  • 7Eversource may be obligated to make the buyer whole in the event of the Revolution Wind project's abandonment, including covering purchase price, expenditures, and a 6.5% IRR.

Frequently Asked Questions

The primary purpose of this 8-K filing is to announce Eversource Energy's entry into a material definitive agreement to sell its membership interests in North East Offshore, LLC and South Fork Class B Member, LLC, which are related to the South Fork Wind and Revolution Wind projects, to GIP IV Whale Fund Holdings, L.P.

Eversource Energy will receive approximately $1.1 billion in aggregate consideration at closing, subject to adjustments. The filing also outlines potential post-closing adjustments related to construction cost overruns and future project performance (IRR targets), which could impact the final net proceeds.

Yes, Eversource Energy will share in capital expenditure overruns for the Revolution Wind project, and may have to make significant post-closing payments to the buyer if project IRRs do not meet certain thresholds. Additionally, in the event of abandonment of the Revolution Wind project, Eversource could face substantial financial obligations, including making the buyer whole and covering decommissioning costs.

The transaction is subject to several closing conditions, including the absence of a material adverse effect, maintenance of Eversource's credit ratings above certain thresholds (e.g., BBB- by S&P), expiration of antitrust waiting periods (Hart-Scott-Rodino), approval from the European Commission and FERC, a declaratory ruling from the New York Public Service Commission, finalization of certain agreements with Orsted DevCo LLC, the South Fork Wind project achieving Commercial Operation Date (COD), and the Sunrise Wind project being spun out from NEO.