TerraForm Power and SunEdison Announce Acquisition of 521 MW of Wind Power Plants From Atlantic Power
April 01 2015 - 8:22AM
- Operating wind fleet with expected annual Cash
Available for Distribution ("CAFD") of $44 million
- Remaining average contract duration of 18 years, with
average counterparty credit rating of A3
- Expected unlevered cash-on-cash return of
9%2
- Anticipate funding the acquisition with a warehouse
facility, creating an operating project portfolio to be dropped
into TerraForm Power at a future date
TerraForm Power, Inc. (Nasdaq:TERP), an owner and operator of clean
energy power plants, today announced the acquisition of 521 MW
(net) of operating wind power plants from Atlantic Power (TSX:ATP)
(NYSE:AT), an independent power producer with a well-diversified
fleet of power generation assets throughout the United States and
Canada.
These five wind farms are located in high wind areas of Oklahoma
and Idaho. The assets are contracted under long term power purchase
agreements (PPAs) with investment grade utilities with a
weighted-average credit rating of A3. The PPAs have a
weighted-average remaining life of 18 years.
The portfolio is expected to generate average annual adjusted
EBITDA of $56 million and average annual CAFD of $44 million over
the next 10 years. This represents a 9%1 unlevered cash-on-cash
return.
Equity consideration for the portfolio will be $350 million,
subject to working capital and other customary adjustments. The
power plants have $165 million of project debt that the company
intends to retire, and approximately $110 million proportional
share of project debt that will remain outstanding.
TerraForm has secured fully committed bridge financing of up to
$515 million to support the transaction. The company intends to
fund the acquisition with a drop down warehouse facility in
partnership with third party equity investors and its sponsor
SunEdison. This transaction would provide TerraForm with increased
visibility to long-term dividend growth from contracted operating
assets. Concurrent with the acquisition closing, these 521 MW of
projects would be added to the TerraForm Call Right Projects list,
increasing the total from 3.4 GW to 4 GW, and increasing the
contracted call right projects from 2.5 GW to 3 GW.
"We are grateful for the opportunity to work with Atlantic
Power. This landmark transaction illustrates the strength and
agility of the combined TerraForm-SunEdison platform as well as the
robustness of our proprietary deal pipeline," said Carlos Domenech,
Chief Executive Officer of TerraForm Power. "We expect the
warehouse facility to be an innovative financing structure that
provides repeatable and scalable funding to secure future growth;
we expect the drop down returns to be at parity with the
acquisition yields."
The transaction is expected to close in the second quarter of
2015, subject to regulatory approvals and customary closing
conditions.
Morgan Stanley acted as the exclusive financial advisor to
TerraForm Power.
Acquisition Highlights:
- $56 million of expected adjusted EBITDA (10 year average)
- $44 million of expected CAFD (10 year average)
- $350 million in initial cash consideration
- $165 million in project debt that the company intends to
retire
- 9%1 expected cash-on-cash unlevered return
About TerraForm Power
TerraForm Power is a renewable energy leader that is changing
how energy is generated, distributed and owned. TerraForm Power
creates value for its investors by owning and operating clean
energy power plants. For more information about TerraForm Power,
please visit: http://www.terraform.com.
Safe Harbor Disclosure
This release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Such forward-looking
statements are subject to certain risks, uncertainties and
assumptions, including with respect to expected Adjusted EBITDA,
cash available for distribution, earnings, future growth and
financial performance, and typically can be identified by the use
of words such as "expect," "estimate," "anticipate," "forecast,"
"intend," "project," "target," "plan," "believe" and similar terms
and expressions. Forward-looking statements are based on current
expectations and assumptions. Although TerraForm Power believes
that its expectations and assumptions are reasonable, it can give
no assurance that these expectations and assumptions will prove to
have been correct, and actual results may vary materially. Factors
that could cause actual results to differ materially from those set
forth in the forward-looking statements include, among others: the
failure of counterparties to fulfill their obligations under
offtake agreements; price fluctuations, termination provisions and
buyout provisions in offtake agreements; delays or unexpected costs
during the completion of projects under construction; TerraForm
Power's ability to successfully identify, evaluate and consummate
acquisitions from SunEdison or third parties or changes in expected
timing of any acquisitions; government regulation; operating and
financial restrictions under agreements governing indebtedness;
TerraForm Power's ability to borrow additional funds and access
capital markets; TerraForm Power's ability to compete against
traditional and renewable energy companies; TerraForm Power's
ability to integrate acquired power plants, including the First
Wind assets; and hazards customary to the power production industry
and power generation operations, such as unusual weather conditions
and outages. Furthermore, any dividends are subject to available
capital, market conditions and compliance with associated laws and
regulations.
TerraForm Power undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. Adjusted EBITDA and cash available for
distribution are estimates as of today's date, April 1, 2015, and
are based on assumptions believed to be reasonable as of this date.
TerraForm Power expressly disclaims any current intention to update
such guidance. The foregoing review of factors that could cause
TerraForm Power's actual results to differ materially from those
contemplated in the forward-looking statements included in this
news release should be considered in connection with information
regarding risks and uncertainties that may affect TerraForm Power's
future results included in TerraForm Power's filings with the
Securities and Exchange Commission ("SEC") at www.sec.gov. In
addition, TerraForm Power makes available free of charge at
www.terraform.com copies of materials it files with, or furnishes
to, the SEC.
Cash Available for Distribution (CAFD)
CAFD is a supplemental non-GAAP measure of TerraForm Power's
ability to earn and distribute cash to investors. This measurement
is not recognized in accordance with GAAP and should not be viewed
as an alternative to GAAP measures of performance, including net
income, net cash provided by (used in) operating activities or any
other liquidity measure determined in accordance with GAAP, nor is
it indicative of funds available to fund our cash needs.
Adjusted EBITDA
Adjusted EBITDA is a supplemental non-GAAP financial measure
which eliminates the impact on net income of certain unusual or
non-recurring items and other factors that we do not consider
indicative of future operating performance. This measurement is not
recognized in accordance with GAAP and should not be viewed as an
alternative to GAAP measures of performance, including net income.
The presentation of Adjusted EBITDA should not be construed as an
inference that our future results will be unaffected by unusual or
non-recurring items.
1 9% return is based on CAFD of $44M and aggregate
consideration of $515M. The CAFD of $44M is after debt payments on
the ~$110M of project debt attributable to acquired minority
interests
CONTACT: Media:
Bruce Dunbar
Finsbury for TerraForm Power
bruce.dunbar@finsbury.com
+1 (646) 805-2070
Investors/Analysts:
Brett Prior
bprior@terraform.com
+1 (650) 889-8628
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