Toucan enters administration with Thurrock Council having ran up debts of £1.5 billion. Image: Unsplash Andreas_Gücklhorn.
Solar farm owner Toucan Energy Holdings has reportedly entered into administration, with the company's main creditor Thurrock Council having run up debts of around £1.5 billion.
As the company responsible for the day-to-day management of financier Liam Kavanagh’s solar farms, Toucan has been embroiled in controversy in recent months. The firm owns a portfolio of 53 solar parks across the UK with a combined capacity of 513MW. These are owned via a number of Special Purpose Vehicle subsidiaries (SPVs).
The controversy surrounding Toucan Energy follows an investigation conducted by the Bureau of Investigative Journalism, which looked into the use of taxpayer’s money from Thurrock Council with regards the solar farm scheme.
The Guardian reported that Kavanagh’s firms received a reported £655 million from Thurrock over four years to buy up the 53 sites.
Following an exhaustive investigation process conducted by the Bureau, it stated that £138 million of investment within Kavanagh’s companies from Thurrock in 2018 to 2019 could not be traced.
Kavangh however has rebuffed this, stating that the funds were fully and properly recorded in the company’s accounts.
In its article, the Bureau suggested the capital could have gone into Kavanagh’s investment firm Rockfire Investment Finance (RIF) and Rockfire Capital, which had issued most of the bonds in which the council invested. RIF was put into liquidation in early 2021 and both the previous Conservative council leader, Rob Gledhill, and the former cabinet member for finance resigned from the Thurrock Council as a direct result of the scandal, the BBC reported.
Thurrock Council has reported amounted debt of up to £1.5 billion through borrowing, leading to the decision to place Toucan Energy entering administration.
“This is a positive move forward in enabling Thurrock Council to resolve its financial position and maximise recovery for Thurrock residents. The solar farms held by Toucan continue to generate income and as the primary creditor Thurrock Council will be able to seek to recover the value of investment," said council leader Mark Coxshall.
“I will be able to share more detail regarding the impact of this on the Council’s finances at the Cabinet meeting on 7 December 2022. As I have said before I am determined to be open and transparent regarding the Council’s finances and I am seeking to bring certainty to them as soon as possible. I am confident that the decision to place Toucan into administration is a significant step to reducing our overall debt.”
Following the news that the company would be put into administration, Kavanagh told Solar Power Portal: "I cannot comment on the decision to put the company into administration having had no role in that decision or indeed the management of the Toucan business."
"I installed a new management team in June 2022 and, as far as I am aware, the underlying business has traded strongly and all interest has been paid in full and on time in accordance with the terms agreed between Thurrock Council and the company. Although I cannot speculate as to the reasons for the company going into administration, if I am approached, I will assist the administrator to achieve the best outcome for the company's stakeholders. I am confident that this is a business with a positive future, particularly given the recent and current growth in the green energy market."
Jim Tucker, David Pike and Kristina Kicks from Interpath Advisory have been appointed joint administrators to Toucan Energy. According to Interpath, the underlying solar park operations will not be in administration and will continue to operate normally.
Despite this, it has been implied that these assets will be sold with “considerable interest” anticipated for the assets.
“This is a significant portfolio of high-quality renewable generation assets which, as the UK accelerates its transition towards a green and renewable future, have an important role to play in the nation’s energy security strategy,” said Jim Tucker, managing director at Interpath Advisory.
“The underlying solar park operations are not in administration and continue to operate as normal. Our immediate priority is to put in place the stable platform at the top of the group which will reassure stakeholders that it is business-as-usual in the underlying operations.
“Given their significant underlying cash generation, we expect considerable interest in the assets. In the coming months we will work closely with our M&A advisors, as well as Thurrock Council as the Company’s major creditor, to bring these assets to market in a full, unhurried, sales process.
“Our proposals to creditors will be published within eight weeks of our appointment, at which time we will provide more details about our strategy for the administration.”