Just Energy Group Inc. agreed to sell its Hudson Energy Supply UK Ltd. business to Shell Energy Retail Ltd., Royal Dutch Shell PLC's retail arm, for up to £10.5 million, or C$17 million.
"The sale of our UK operations is part of our broader strategy to concentrate on our higher-margin North American operations, while also improving our liquidity," Just Energy President and CEO Scott Gahn said in an Oct. 8 news release.
As part of the deal, Canada-based Just Energy will receive approximately £2 million, or about C$3.2 million, at closing. The remaining amount of up to £8.5 million, or about C$13.8 million, will be settled if the U.K.'s capacity market scheme is reinstated within a specified period.
Hudson Energy provides approximately 200,000 residential customers with gas and renewable electricity through its residential trading arm, Green Star Energy. It also supplies bespoke gas and renewable electricity contracts to roughly 2,000 commercial customers. Upon deal completion, the company will operate as a wholly owned subsidiary of Shell Energy Retail.
Proceeds from the sale will be used by Just Energy pay a portion of its debt. Subject to customary conditions and approvals, the transaction is expected to close by the end of 2019.
Cost savings
Just Energy also identified roughly C$20 million of additional annualized savings in its North America operations by implementing optimization strategies.
The company plans to eliminate low-value activities in non-selling costs, optimize online commission spending and improve efficiency in its customer care group.
As a result, its total cost savings estimate for fiscal year 2020 would be C$60 million, excluding costs related with severance and Just Energy's strategic review process.
Just Energy's board initiated a strategic review process in June, following expressions of interests from a number of parties concerning potential transactions with the company. There is no specific time frame for the conclusion of the review.
Just Energy's financial adviser for the sale of its U.K. business was National Bank Financial Inc.
