Shell buying spree cranks up race for clean energy

Royal Dutch Shell has spent over $400 million on a range of acquisitions in recent weeks, from solar power to electric car charging points - in a bid to reduce its carbon footprint. (AFP)
Updated 26 January 2018
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Shell buying spree cranks up race for clean energy

LONDON: Royal Dutch Shell has spent over $400 million on a range of acquisitions in recent weeks, from solar power to electric car charging points, cranking up its drive to expand beyond its oil and gas business and reduce its carbon footprint.
The scale of the buying spree pales in comparison to the Anglo-Dutch company’s $25 billion annual spending budget. But its first forays into the solar and retail power sectors for many years shows a growing urgency to develop cleaner energy businesses.
The investments are not limited to renewables such as biofuels, solar and wind. Shell, as well as rivals such as BP , Exxon Mobil and Chevron, are betting on rising demand for gas, the least polluting fossil fuel, to power the expected surge in electric vehicles in the coming decades.
To that end, Shell agreed in December to acquire independent British power provider First Utility for around $200 million, according to several sources close to the deal. The value of the acquisition had not been previously disclosed.
Shell declined to comment.
With First Utility, the company hopes to find an outlet for its gas supplies via the retail power market, betting on rising demand as drivers charge electric vehicles at home.
Earlier this month, the company ventured back into solar after a 12-year hiatus when buying a 43.86 percent stake in Silicon Ranch Corporation for $217 million.
In the last three months of 2017, Shell also invested in two projects to develop charging stations for electric vehicles across Europe’s highways. It has also signed agreements to buy solar power in Britain and develop renewables power grids in Asia and Africa.
According to analysts at Bernstein, Big Oil has invested over $3 billion on renewables acquisitions over the past five years, most of which went toward solar.
“Green” merger and acquisition (M&A) activity today averages 13 percent of total energy M&A activity, they said.
“However greater scale is needed for the majors to effectively operate and leverage their trading skills in this market, necessitating more M&A,” they said in a note.
Other companies have also made investments.
BP got back into solar power with a $200 million investment in solar generator Lightsource late last year, six years after exiting the sector with a large writedown.
Total bought battery maker Saft for $1 billion in 2016.

(Reporting by Ron Bousso)


Britain’s Thomas Cook scrambles for $250m to avert collapse

Updated 4 min 38 sec ago

Britain’s Thomas Cook scrambles for $250m to avert collapse

  • Thomas Cook employs 21,000 people across 16 countries
  • Lenders are demanding another £200 million in underwritten funds to support Thomas Cook in its winter trading period

LONDON: Britain’s Thomas Cook scrambled on Friday to find an extra $251 million (£200 million) to satisfy its lenders and secure the survival of the world’s oldest holiday company.
Last month Thomas Cook, the pioneer of the package tour, agreed key terms of a £900 million recapitalization plan with Chinese shareholder Fosun and its banks.
Thomas Cook, which employs 21,000 people across 16 countries, warned on Friday that this could mean shareholders losing all of their investment.
“The recapitalization is expected to result in existing shareholders’ interests being significantly diluted, with significant risk of no recovery,” Thomas Cook said.
Lenders are demanding another £200 million in underwritten funds to support Thomas Cook in its winter trading period, when its cash is usually at a low ebb.
“Discussions to agree final terms on the recapitalization and reorganization of the company are continuing between the company and a range of stakeholders,” Thomas Cook said.
“These discussions include a recent request for a seasonal standby facility of £200 million, on top of the previously announced 900 million pounds injection of new capital.”
Thomas Cook, which has around 600,000 customers on holiday in Europe, has struggled with competition in popular destinations, high debt levels and an unusually hot summer in 2018 which reduced last-minute bookings.
A source close to the discussions said on Thursday that Royal Bank of Scotland (RBS) had hit Thomas Cook with a last-minute demand for the extra funding, adding that the situation “was becoming more critical.”
A spokesman for RBS said the bank did not “recognize this characterization of events” and was working with all parties to “try and find a resolution to the funding and liquidity shortfall at Thomas Cook.”
Under the original terms of the plan, Fosun — whose Chinese parent owns all-inclusive holiday firm Club Med — would contribute £450 million ($552 million) of new money in return for at least 75 percent of the tour operator business and 25 percent of the group’s airline.
Thomas Cook’s lending banks and bondholders were to stump up a further £450 million and convert their existing debt to equity, giving them in total about 75 percent of the airline and up to 25 percent in the tour operator business, the group said.
Thomas Cook said on Friday it would provide further updates “in due course.”