MN8 buys option to acquire US Solar Fund’s stake in 200-MW US solar farm

US Solar Fund Plc (LON:USF) has sold an option for MN8 Energy LLC, formerly known as Goldman Sachs Renewable Power LLC, to buy the London-listed fund’s 50% stake in the 200-MW DC Mount Signal 2 solar farm in California.

The agreement follows an announcement today that Sydney-based solar investor New Energy Solar Ltd (ASX:NEW) is offloading its US solar portfolio to MN8, including its 50% ownership in Mount Signal 2.

Under the option terms, MN8 will pay a non-refundable option fee of USD 1 million and will have the option to acquire the 50% stake for a further USD 52.2 million, excluding working capital, over the next six months with a potential three-month extension.

US Solar Fund agreed to acquire up to 50% of the California solar farm from New Energy Solar in December 2020. According to the announcement, the total proceeds it would receive if MN8 exercises the option imply a gross return of 11% per annum since then.

US Solar Fund says the deal between New Energy Solar and MN8 is an attractive opportunity to realise the value in its investment. The option structure will allow MN8 to complete the acquisition of US Solar Fund's 50% stake after its acquisition of New Energy Solar's 50%.

The Mount Signal 2 solar farm is located in the Imperial Valley of southern California. It came online in December 2019 and has been operating under a 20-year power purchase agreement (PPA) with Southern California Edison since June 2020.

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