- Captures Premium Asset Values Available for Renewable
Energy Projects
- Divestiture Results in Improved Financial Strength and
Flexibility
- Continued Focus on Executing the Remaining Key Objectives
for 2015
BOSTON, April 1, 2015 /PRNewswire/ -- Atlantic Power
Corporation (NYSE: AT) (TSX: ATP) ("Atlantic Power" or the
"Company") today announced an agreement (the "Purchase Agreement")
to sell its wind generation projects to TerraForm Power, Inc.
("TerraForm") (NASDAQ: TERP) for cash proceeds of approximately
$350 million, subject to certain
adjustments.
These operating wind projects, representing 521 MW net
ownership, are indirectly owned by Atlantic Power Transmission,
Inc., a wholly-owned direct subsidiary of the Company, and will be
acquired by TerraForm AP Acquisition Holdings, LLC, an indirect
subsidiary of TerraForm. The following five projects located
in Idaho and Oklahoma will be transferred to TerraForm
subject to the Purchase Agreement: Goshen North (12.5% economic interest), Idaho
Wind (27.6% economic interest), Meadow
Creek (100% economic interest); Rockland Wind Farm ("Rockland") (50% economic
interest, but consolidated on a 100% basis); and Canadian Hills
(99% economic interest).
In addition to the receipt of approximately $350 million in cash proceeds, the Company will
deconsolidate approximately $249
million of project debt (or approximately $275 million as adjusted for the Company's
proportional ownership of Rockland, Goshen
North and Idaho Wind) and approximately $239 million of non-controlling interest related
to tax equity interests at Canadian Hills and the minority
ownership interests at Rockland and Canadian Hills. On that
basis, the total enterprise value ("EV") of the transaction is
expected to be approximately $837
million, net of estimated reserves and other cash at the
projects at closing.
"Together with our board, we considered a wide range of options
for asset divestitures over the last six months as well as options
for refinancing the balance sheet without asset sales," said
James J. Moore, Jr., President and
Chief Executive Officer of Atlantic Power. "This transaction
represents a compelling valuation for our assets and will enhance
our financial strength and flexibility."
Based on the Company's 2015 guidance and adjusting for the
Company's proportional ownership of Rockland and Canadian Hills,
the EV/Project Adjusted EBITDA multiple implied by the transaction
is approximately 14 times. The equity valuation of
$350 million represents a multiple of
approximately 13 times expected 2015 cash distributions from the
projects.
Mr. Moore continued, "In addition to completing the wind
transaction, we are focused on executing the other elements of our
business plan, including evaluating the best use of proceeds to
optimize our capital structure for the benefit of shareholders,
continuing to implement significant reductions in our corporate
general and administrative expenses beyond the level already
targeted for 2015, and making ongoing investments in our fleet at
attractive cash-on-cash returns."
Net proceeds to the Company from the transaction are expected to
be approximately $338 million after
estimated transaction fees and transaction-related taxes. The
Company's 2015 guidance provided on February
26, 2015 did not assume any potential asset sales. The
Company expects to update this guidance for the sale of its wind
assets when it reports results for the first quarter of 2015 after
the market closes on May 7, 2015.
The Purchase Agreement contains customary representations,
warranties, covenants, and indemnification provisions. The
sale is subject to various closing conditions and approvals,
including the receipt of regulatory approval by the Federal Energy
Regulatory Commission, antitrust approvals under the
Hart-Scott-Rodino Act, and other required governmental, third party
and lender consents and approvals. The Purchase Agreement
contains certain termination rights for both parties, including if
the closing does not occur within ninety (90) days following the
date of the Purchase Agreement (subject to extension to one hundred
eighty (180) days following the date of the Purchase Agreement, if
necessary to obtain applicable governmental approvals).
Closing of the transaction is expected by the end of the second
quarter.
In connection with the Purchase Agreement, the Company also
entered into a Guaranty Agreement (the "Guaranty Agreement"), under
which it has agreed to guarantee the full and prompt payment of all
payment obligations of the Company under the Purchase
Agreement. The parties have agreed to utilize representation
and warranty insurance for coverage of certain indemnification
obligations, subject to a cap and certain exclusions.
Goldman, Sachs & Co. served as financial advisor to the
Company. Morgan, Lewis & Bockius LLP served as legal
counsel.
About Atlantic Power
Atlantic Power owns and operates a diverse fleet of power
generation assets in the United
States and Canada. Atlantic Power's power generation
projects sell electricity to utilities and other large commercial
customers largely under long-term power purchase agreements, which
seek to minimize exposure to changes in commodity prices. Its
power generation projects have an aggregate gross electric
generation capacity of approximately 2,945 MW in which its
aggregate ownership interest is approximately 2,024 MW. Its
current portfolio consists of interests in twenty-eight operational
power generation projects across eleven states in the United States and two provinces in
Canada.
Atlantic Power trades on the New York Stock Exchange under the
symbol AT and on the Toronto Stock Exchange under the symbol
ATP. For more information, please visit the Company's website
at www.atlanticpower.com or contact: Atlantic Power
Corporation, Amanda Wagemaker,
Investor Relations (617) 977-2700, info@atlanticpower.com.
Copies of financial data and other publicly filed documents are
filed on SEDAR at www.sedar.com or on EDGAR at
www.sec.gov/edgar.shtml under "Atlantic Power" or on Atlantic
Power's website.
Project Adjusted EBITDA
Project Adjusted EBITDA is a non-GAAP measure. The Company
has not provided a reconciliation of forward-looking non-GAAP
measures, due primarily to variability and difficulty in making
accurate forecasts and projections, as not all of the information
necessary for a quantitative reconciliation is available to the
Company without unreasonable efforts.
Forward-Looking Statements
Certain statements in this press release may include
"forward-looking statements" within the meaning of the U.S. federal
securities laws and "forward-looking information," as such term is
used in Canadian securities laws (referred to as "forward-looking
statements"). These forward-looking statements can generally
be identified by the use of the words "outlook," "objective,"
"may," "will," "should," "could," "would," "plan," "potential,"
"estimate," "project," "continue," "believe," "intend,"
"anticipate," "expect," "target" or the negatives of these words
and phrases or similar expressions that are predictions of or
indicate future events or trends and which do not relate solely to
present or historical matters. In particular, the
expectations that the Company will successfully sell the projects
currently proposed for sale and that the closing conditions will be
satisfied, that the transaction will enhance the Company's
financial strength and flexibility, that the equity valuation will
represent a multiple of approximately 13 times expected 2015 cash
distributions from the projects, and the future growth, results of
operations, performance and business prospects and opportunities of
the Company and its projects as described above constitute
forward-looking statements. Forward-looking statements
reflect the Company's current expectations regarding future events
and speak only as of the date of this press release. These
forward-looking statements are based on a number of assumptions
which may prove to be incorrect. Forward-looking statements
involve significant risks and uncertainties, should not be read as
guarantees of future performance or results, and will not
necessarily be accurate indications of whether or not or the times
at or by which such performance or results will be achieved.
A number of factors could cause actual results to differ materially
from the results discussed in the forward-looking statements,
including, but not limited to, the factors discussed under "Risk
Factors" in the filings the Company makes from time to time with
the U.S. Securities and Exchange Commission and Canadian securities
regulators. The Company's business is both competitive and
subject to various risks. Although the forward-looking
statements contained in this press release are based upon what the
Company believes to be reasonable assumptions, investors cannot be
assured that actual results will be consistent with these
forward-looking statements, and the differences may be
material. Therefore, investors are urged not to place undue
reliance on the Company's forward-looking statements. These
forward-looking statements are made as of the date of this press
release and, except as expressly required by applicable law, the
Company assumes no obligation to update or revise them to reflect
new events or circumstances.
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SOURCE Atlantic Power Corporation