A 90%-owned subsidiary of Sunflower Sustainable Investments is buying solar parks in Italy with 11 megawatts of planned output capacity for 30 million euros. The memorandum of understanding signed on Tuesday specifies that the deal will be finalized after the successful completion of a due diligence examination. The parks were connected to the electricity grid in November. The parks' builder will be contracted to continue maintaining them.
Sunflower is controlled by Roni Biram and Gil Deutsch, founders and former controlling owners of Excellence Nessuah Investment House. Company officials said they were informed that the solar parks are entitled to special rates for the electricity they generate - 20.1 euro cents per kilowatt for the first 5 MW and 19.1 euro cents for the next 6 MW - as well as a 10% surcharge for using European components and to adjust for market rates for electricity. The special rates are guaranteed for 20 years from the date of connection to the grid. The MOU expires after 45 days if no final agreement is reached.
Sunflower is expected to reap 5 million euros a year from the solar parks, netting a 14% return on investment after operational costs and before any leveraging of the investment. The company is examining loan terms to fund most of the investment. Initial indications from Italian banks are for interest rates in the high single digits, probably about 9%. That would give it a 5% spread between the project's ROI and financing costs covering most of the investment.
Last week Sunflower reported signing an MOU on the purchase of solar parks in Spain with a planned 1.9 MW in output capacity for 7.5 million euros. Sunflower is trading at a company value of NIS 273 million after declining 36% over the past 12 months.
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