The deal between Clean Line Energy and National Grid USA, though finalized in the last couple of weeks, was close to completion when Hurricane Sandy hit, Clean Line CEO Michael Skelly told TransmissionHub.
“We’d been finalizing it for the last couple of months and then we were almost ready to announce and Sandy came along and [National Grid], for obvious reasons, got very involved in that, so in the last couple of weeks we finalized,” Skelly said Nov. 27.
National Grid is investing $40m in Clean Line through subsidiary Grid America, a defunct company whose existing legal entity, National Grid, is appropriating as a holding company. The name of the holdco may change, according to a National Grid spokesperson.
“It’s a good investment for the company,” a person familiar with the situation told TransmissionHub. “It’s a holdco investment, so that just keeps the company able to pursue its development projects and then there will be separate deals around ownership and financing of the projects. It gives them a [right of first refusal] first call in those. I think it’s a good transaction for Grid to pursue projects outside their utility footprint.”
Skelly declined to say who approached whom for the transaction and to name other interested investors in the process run by Lazard.
Clean Line cemented its relationship with the bank about a year ago, Skelly said.
“We’ve talked to them for years about what we’re doing and different ideas, and then about a year ago we decided to formalize the relationship with Lazard and start thinking more seriously about some of the options out there,” Skelly said.
Asked whether Clean Line may make similar announcements in the near future, Skelly said the projects it is undertaking will require capital infusions for the developing and construction phases of the projects.
“In a business that’s going to require capital for the foreseeable future, there may be other investors who get involved,” Skelly said.
He noted, however, that as part of the transaction, National Grid negotiated the ability to continue to invest in future projects.
“We may or may not bring in additional investors. Grid is a many multi-billion dollar company so they certainly have the ability to do this.”
National Grid joins the Ziff family as the company’s investors.
In the announcement of the transaction, Clean Line said National Grid had the ability to acquire a significant stake in Clean Line’s HVDC projects.
National Grid will have two of five board seats. The transaction is subject to regulatory approval.