VisionAIR5 wind turbines. Source: UGE. License: All rights reserved.
Canadian renewables group UGE International Ltd (OTCQB:UGEIF) on Wednesday unveiled plans to dispose of its loss-making wind power division in order to strengthen its balance sheet and focus on the solar segment.
The company has entered into a binding term sheet with Zhenyu Li -- senior manager of UGE's Chinese factory. This pact calls for Zhenyu Li to take over the company's wind power subsidiary, UGE Holdings Inc, along with all of its liabilities. The transaction, for which a definitive agreement is yet to be signed, will not involve any solar-related assets.
UGE International said it wants to focus on its solar business, which has grown more quickly over the past few years compared to the company's wind operations. The planned sale will not only allow UGE to do that, but will also improve net liabilities by USD 3.9 million as compared to its audited consolidated balance sheet as at December 31, 2015.
As at end-2015, the net liabilities of the group being sold amounted to USD 7.5 million (EUR 6.8m). In consideration for the assumption of these liabilities, the buyer will receive, both directly and indirectly, two five-year promissory notes totalling USD 3.6 million. The notes will accrue interest at a rate of 6.5% annually.
The wind business will continue to operate under the brand name V-AIR Wind Technologies following the sale.