Ascendant ponders potential sale
Ascendant Group Ltd is considering putting itself up for sale.
The owner of power utility Belco said in a statement yesterday morning that its board of directors has “begun a process of evaluating strategic alternatives, including the potential sale of Ascendant Group Ltd”.
Trading of Ascendant shares on the Bermuda Stock Exchange had earlier been suspended “pending an announcement” from the company.
In a statement, Ascendant said: “Among the range of alternatives we see ahead, the company, with the assistance of its financial adviser Guggenheim Securities LLC, is exploring the potential benefits that a new owner of Ascendant can bring to Bermuda — including greater access to capital for domestic investment and the infrastructure development expertise necessary to accelerate the next phase of Belco's evolution.”
The announcement comes as the Regulatory Authority of Bermuda considers proposals for the future of the island's electricity generation.
Belco has put forward plans for using liquefied natural gas as a principal fuel for electricity generation, in the Integrated Resource Plan, a document that will detail the island's long-term electricity plan. Others have put forward alternative visions.
The plan filed with the regulator by BE Solar as an alternative to the IRP, entailing a more aggressive move to renewable energy sources, received the most support during the RA's consultation period that ended last November. The plan included an offshore wind farm.
Ascendant said yesterday: “With respect to regulation, the mandate is to lower rates through increased competition in electricity generation, as well as to ensure renewables play a larger role in the island's energy mix.
“Renewable energy is the future, but there is currently a gap between that future and today's need for reliable and affordable energy.”
Belco is building a new power plant in Pembroke to replace some of its fleet of ageing generators, many of which have gone well beyond their expected lifespan.
In April last year, Ascendant was the subject of a takeover bid from US firm Twenty First Century Utilities. The $15-per share bid was about 50 per cent more than than the company's share price at the time.
Joe Garcia, a senior adviser on TFC's management team and a former US congressman, said at the time TFC's approach was based on investing in energy efficiency and renewables, creating a decentralised grid that was shaped by the preferences of customers.
An attempt to contact Mr Garcia for comment yesterday was unsuccessful.
Ascendant stated: “The company understands that its responsibility is to a broad group of stakeholders, including shareholders, customers, employees, and regulators.
“Each of these stakeholders brings to bear on the company a wide range of perspectives and expectations.
“Furthermore, the industry in which we operate is facing unprecedented change, and — with change — we must have the ability to explore and leverage new opportunities for the betterment of Bermuda.”
The statement added that Ascendant's share price had risen from $5 to $17 over the past five years. The company has been aggressively buying back its own shares and last traded last week at $16.75.
“The market value remains well under book value,” the statement added.
“We know our Belco customers want lower rates and we are actively focused on reducing these through finding efficiencies in how we operate every aspect of our company.
“We have laid the groundwork for Bermuda's energy future with flexibility at the forefront, so the island can pursue any energy mix that is appropriate.
“Current infrastructure improvements to the electricity system include replacement generators that will ensure a cost effective, reliable supply of energy for the foreseeable future, irrespective of any additional generation sources.
“Through the commitment and hard work of our employees, we are modernising the grid and installing advanced metering infrastructure island wide so that Bermuda can pursue the most advanced energy technology in the future.
“We are also mindful of the needs of our employees. As we strive to become more efficient, we are committed to balancing the needs of employees against the need to reduce electricity prices for our customers.
“We remain enthusiastic about the future prospects of Ascendant, to the benefit of all of our stakeholders.”
As well as Belco, Ascendant also owns AirCare, iFM, a facilities management company, and iEPC, an engineering and construction business.