Hedge fund Magnetar seeks to wind up Lyon Group solar and storage unit

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US-based Magnetar, which invested in Australian solar and battery storage company Lyon Group to great fanfare in 2017, now seeking to wind up one of its units.

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The US hedge fund manager Magnetar Capital – brought in as a significant investor to underpin Australia’s Lyon Solar ambitious solar and storage plans – is now seeking to wind up one of the Lyon companies.

Magnetar owns 25 per cent of Lyon, buying the shareholding two years ago as part of a deal to help finance Lyon’s plans to build at least 1GW of large scale solar and battery storage in South Australia and Victoria. 

Nothing has come of those plans to date, and Magnetar – through a subsidiary called Magnetar Solar Australia DAC – is seeking to wind up a Lyon unit, known as Lyon Infrastructure Investment 1, in the Supreme Court of NSW.

A spokesman for Lyon says Magnetar owns 25 per cent of Lyon Solar. The other 75 per cent is owned by the entity against which Magnetar has issued this proceeding (Lyon Infrastructure Investments 1 Pty Ltd).

It is the second major legal battle fought by Lyon, which was sued in late 2017 by US solar manufacturer and developer First Solar. It had also sought the winding up of a Lyon Group unit. That dispute has now moved to confidential arbitration.

In a statement, Lyon confirmed the move by Magnetar and said it was the result of unsuccessful negotiations triggered by Lyon seeking the exit of Magnetar because of a “lack of alignment” on business strategies.

“Lyon Group believes that Magnetar Solar, a 25% investor in a Lyon subsidiary, is seeking to capture a greater share of the value in Lyon’s unique dispatchable solar projects, including via legal avenues,” the company said in a statement.

“Lyon will vigorously defend any attempt by Magnetar Solar to capture a greater share of the value in Lyon and its projects.

“Lyon will not bow to an aggressive US hedge fund seeking to exert maximum commercial leverage in the context of the growing value of Lyon Group and its dispatchable solar projects.”

Lyon has recently teamed up with Japanese energy giant Jera, and is proposing to build the Cape York Battery Power Plant which it says will be completed later this year. It comprises a 55MW solar farm and  20MW/80MWh battery storage unit from Fluence.

It says it will be the first “fully integrated” grid-connected solar and battery storage project and its four hours of storage – more than any other battery now being built – means it will be able to act as a peaking plant in Australia, the first battery to do so.

Lyon also says it is “progressing towards” securing its generator performance standard for Lyon’s large solar plus battery storage projects at Riverland in South Australia and Nowingi in Victoria.

“Lyon believes that solar peakers will quickly take the place of gas peakers because their speed of dispatch, lower and more predictable operating costs and by extension lower risk offers unparalleled flexibility.”

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